jurisdictional disputes under the arbitration act 1996: a ... remedies and may be refused on the...

ARBITRATION INTERNATIONAL, Vol. 21, No. 3© LCIA, 2005

253

Jurisdictional Disputes under the Arbitration Act 1996: A Procedural Route Map


by

PETER AEBERLI*

Arbitration InternationalJohnny Veeder Q.C.Arbitration International, Volume 21 Number 32005

Articles

IT IS some years since the Arbitration Act 1996 (‘AA 1996’ or ‘the 1996 Act’)introduced into the arbitral law of England and Wales

1

principles of Kompetenz-Kompetenz largely derived from the UNCITRAL Model Law on Arbitration(‘Model Law’).

2

It did so by providing that, unless otherwise agreed by the parties,and subject to challenge by any available arbitral process of appeal or review or inaccordance with the provisions of Part I of the 1996 Act, an arbitral tribunal mayrule on its own substantive jurisdiction,

3

that is, as to whether there is a validarbitration agreement, whether the tribunal is properly constituted and whetherthe matters in question have been submitted to arbitration in accordance with thearbitration agreement.

4

There is, now, a significant body of case law concerning this new regime andits relationship with the court’s power to consider jurisdictional issues whetherunder express provisions of the 1996 Act or at common law. This article writtenin early 2004, and revised for publication in mid 2005, considers, in the light ofthat case law and the provisions of the 1996 Act, the options available to the

* DipICArb, RIBA ARIAS FCIArb, Barrister, Chartered Arbitrator, Adjudicator, Registered CEDRMediator. The author is a visiting senior lecturer at Kings College London. This article developed from atalk given by the author to the Society of Construction Arbitrators and from the author’s lectures onarbitration practice and procedure for the Kings College Centre of Construction Law and Management.

1

The 1996 Act also applies in Northern Ireland, thus the principles discussed in this article are applicablethere. The 1996 Act does not apply in Scotland.

2

There is no single doctrine of Kompetenz-Kompetenz (compétence-compétence). Rather, these wordsembody a range of concepts, which differ between jurisdictions, concerning the relationship between thearbitral tribunal and the court in deciding questions concerning the tribunal’s jurisdiction and, where thetribunal has determined its own jurisdiction, the manner and timing of any recourse to the court in respectof the tribunal’s determination, and the circumstances in which the tribunals’ determination may becomefinal.

See

W. Park, ‘The Arbitrability Dicta in

First Options v. Kaplan

’ in (1996) 12

Arb. Int’l

137 at p. 149.

3

AA 1996, s. 30; note also s. 7 (giving effect to the doctrine of separability). These provisions are analogous to,although differently worded from, art. 16(1) of the Model Law. Unlike art. 16(1), they can be excluded byagreement of the parties;

see

AA 1996, s. 4.

4

AA 1996, s. 30(1). Compare art. 36(1)(a)(i), (a)(iii) and (iv) of the Model Law.

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Arbitration International, Volume 21 Number 3

parties and the tribunal for dealing with questions concerning the tribunal’ssubstantive jurisdiction where the seat (the legal place) of an arbitration is inEngland and Wales.

Part I of this article considers how jurisdictional objections raised by arespondent or intended respondent to arbitral proceedings are addressed.

5

Part IIconsiders how jurisdictional objections to arbitration are dealt with if raised in thecontext of proceedings to stay or restrain a court action on the grounds that theclaims in that action should be arbitrated. Part III discusses a number ofprocedural matters relevant to proceedings in the courts of England and Walesconcerning arbitration. Part IV considers how the manner in which objection toan arbitral tribunal’s jurisdiction are determined may impact the enforcement ofits award on the merits, both in England and Wales and internationally.

I

I. JURISDICTIONAL OBJECTIONS RAISED BY A RESPONDENT

The 1996 Act provides two alternative procedures for dealing with jurisdictionalobjections by a respondent or intended respondent to arbitral proceedings. Oneenvisages recourse to the court without the respondent’s participation in thearbitration. The other envisages the respondent’s participation in the arbitration,albeit subject to its jurisdictional objection, with certain rights of recourse to thecourt thereafter.

a

a. Jurisdictional Challenges by a Non-Participant in the Arbitration

AA 1996, s. 72(1) provides that a person alleged to be a party to arbitralproceedings but who takes no part in the proceedings may challenge thetribunal’s substantive jurisdiction by proceedings in court for a declaration,injunction or other appropriate relief.

6

This codifies, in substance, the commonlaw regime under which, prior to the 1996 Act, an arbitral tribunal’s jurisdictioncould be challenged in court;

7

but with one significant change. Unlike at commonlaw, recourse to the court under s. 72(1) is only available to those who take nopart in the arbitral proceedings. This right is lost by appointing or participating inthe appointment of an arbitrator, or by appearing before or corresponding withthe tribunal with a view to it exercising any power, even if such steps are expresslystated to be subject to a jurisdictional objection.

8

Thus, particular care must betaken when advising the tribunal, or any arbitral institution responsible for itsconstitution, that its jurisdiction is disputed, to ensure that the communication,considered objectively in the light of any rules alleged to be incorporated into the

5

Respondent, for the purpose of this article, includes a respondent to a counterclaim.

6

In

Law Debenture Trust Corp PLC

v.

Elektrim Finance BV

[2005] EWHC 1412 (ch), an attempt was made to stays. 72 proceedings to arbitration, on the grounds that the tribunal should deal with the jurisdictional dispute.Not surprisingly the court rejected this argument.

7

As discussed in cases such as

Brown (Christopher) Ltd

v.

Genossenshaft and others

[1954] 1 QB 8.

8

Contrast the position under AA 1996, s. 31(1), discussed

infra

.


255

arbitration agreement, cannot be interpreted as a request that the tribunal orinstitution exercise any power; for instance a power to consider and rule on itsjurisdiction.

9

If it is, the right of recourse to the court under s. 72(1) will be lost.

i

i. The court’s powers under section 72(1)

In proceedings claiming relief under s. 72(1), the court will determine, on oralevidence if necessary, the jurisdictional objection referred to it, dismissing theclaim if it concludes that the tribunal has jurisdiction, or granting the declarationor injunction sought if it concludes that the jurisdictional objection is wellfounded. As with any other judgment of the court, its decision will, subject toappeal, be final and conclusive between the parties in any subsequent action orarbitration in England and Wales under the doctrine of

res judicata

.

10

If an arbitraltribunal, having been advised that an action is pending under s. 72(1), does notstay the proceedings before it pending the outcome of that action, it may bepossible to obtain an interim injunction from the court to restrain the respondentor, if appropriate, the tribunal, from prosecuting the arbitration pending the finaldetermination of the jurisdictional objection.

11

ii

ii. Timing of a section 72 application

In practice, an alleged party to arbitral proceedings who takes no part in thearbitration because of jurisdictional objections should bring those objectionsbefore the court under s. 72(1) promptly. Declarations and injunctions areequitable remedies and may be refused on the grounds of delay

12

irrespective ofthe merits of the application, leaving the jurisdictional question to be determinedby the tribunal. Furthermore, the risk for the non-participant of having an awardon the merits made against it in default of its case, only for the court to conclude,on enforcement proceedings, that the tribunal did have jurisdiction is, generally,

9

See Caparo Group Ltd

v.

Fagor Arrasate Sociedad Cooperativa

[2000] ADRLJ 254, which concerned an allegedarbitration agreement incorporating the ICC Rules. Clarke J. considered that had Caparo (the partydisputing jurisdiction) written to the ICC asking the ICC Court to reject Fagor’s application for arbitrationunder art. 8(3) of the ICC Rules, this would have been sufficient participation to bar recourse to s. 72(1); In

Law Debenture Trust Corp PLC

v.

Elektrim Finance BV

[2005] EWHC 1412 (ch) there was no participation as thealleged respondent to the arbitration did not appoint an arbitrator and did not seek to advance argumentsin the arbitration for the benefit of the arbitrators.

10

For an introduction to the relevant principles

see Fidelitas Shipping Co. Ltd

v.

V/O Exportchleb

[1965] 1 Lloyd’sRep. 222 at 229, 300.

11

As was done in

Zaporozhye Production etc. Society

v.

Ashly Ltd

[2002] EWHC 1410 (Lawtel). In that case, theapplication for an interim injunction was dismissed, not because the court considered that it had no powerto grant such relief, but because the balance of convenience was strongly in favour of allowing the arbitrationto continue. But note the contrary view, that an interim injunction should not be available in suchcircumstances, in Mustill and Boyd,

Commercial Arbitration

(2nd edn, 2001), p. 362.

12

In


v.

Ashly Ltd

[2002] EWHC 1410 (Lawtel) an interim injunction to restrainarbitral proceedings, applied for the day before the arbitral hearing, was refused on the grounds that it wasnot appropriate to grant the relief claimed at such a late stage, the balance of convenience beingoverwhelmingly against doing so. The court considered that the applicant’s misfortune (in being faced witha hearing in an arbitration in which it had not participated) was of its own making in that it could have, buthad not taken the opportunity to raise its jurisdictional objections in the arbitration.

256


too great to justify allowing the arbitration to progress without the jurisdictionalquestion being determined.

iii

iii. Non-participant’s right to challenge an arbitral award under section 67

If, despite these risks, the non-participant does not bring its jurisdictionalobjection to the court under s. 72(1) before the tribunal makes an award, or itis denied relief under that section for procedural reasons, such as delay, notconcerned with the merits of the objection,

13

it may question the tribunal’s awardon jurisdictional grounds under AA 1996, s. 67. The right to do so is subject tothe 28-day timescale provided for in AA 1996, s. 70(3).

14

But, unlike a participantin the arbitration, the non-participant need not first exhaust any available arbitralprocess of appeal or review, or recourse to the tribunal, under s. 57, to correct itsaward or make an additional award.

15

b

b. Can a Party Commencing Arbitral Proceedings have Recourse to Section 72?

A party commencing arbitral proceedings who faces or anticipates jurisdictionalobjections from its opponent cannot, itself, have recourse to the court unders. 72(1) to have the jurisdictional dispute resolved. Rather, it should proceed withthe appointment of the tribunal and have the jurisdictional dispute determined bythat tribunal.

16

If the appointment of the tribunal, as in the case of a two or three-person tribunal where each party appoints an arbitrator, involves the respondent’scooperation, and that cooperation is not forthcoming, the claimant may be ableto overcome the impasse by recourse to ss. 17 or 18 of the 1996 Act, if available.

17

i

i. Constituting the tribunal under section 17

Section 17 provides, unless otherwise agreed by the parties, a mechanism forconstituting the tribunal where each of two parties to an arbitration agreement isto appoint an arbitrator and one party refuses to do so or fails, within thespecified time,

18

to appoint its arbitrator. In such a case, the party who has dulyappointed its arbitrator may give written notice to the party in default that itproposes to appoint its arbitrator to act as sole arbitrator. If the party in defaultdoes not make and notify an appointment within seven days of being given thatnotice, the other may (presumably, although, this is not stated, by notice to the

13

See

the discussion on this point in


v.

Ashly Ltd

[2002] EWHC 1410 (Lawtel).

14

AA 1996, ss. 67 and 70 are considered in greater detail

infra

.

15

AA 1996, s. 72(2).

16

Vale de Rio Doce Navegaçao SA

v.

Shanghai Bao Steel Ocean Shipping Co. Ltd

[2000] 2 Lloyd’s Rep. 1.

17

AA 1996, ss. 17 and 18 are non-mandatory,

see

s. 4. Thus, they will be excluded if the parties agree arbitralrules that provide for an arbitral institution to make the necessary appointment.

See e.g.

, art. 7.2 of the 1998LCIArb Rules, art. 8(4) of the 1998 ICC Rules and art. 6 of the UNCITRAL Arbitration Rules.

18

This period is usually stated in the arbitration agreement. If not, the period is 14 days after service of awritten request to make the appointment, AA 1996, s. 17(4), (5), (6). If the parties’ arbitration agreementincludes provisions dealing with this problem, s. 17 will be excluded and its machinery will not be availableto challenge the sole arbitrator’s appointment; see

Minermet SpA Milan

v.

Luckyfiled Shipping Corp SA

[2004] 2Lloyd’s Rep 348.


257

other party and to the arbitrator, he having agreed to act as sole arbitrator)

19

appoint its arbitrator as sole arbitrator; the awards of the sole arbitrator beingbinding on both parties as if he had been appointed by agreement.

20

The party indefault can, however, apply to the court to set aside the party arbitrator’sappointment as sole arbitrator, but must do so promptly.

21

If the court allows theapplication and sets aside the appointment as sole arbitrator, the tribunal will, inso far as necessary, be constituted by the court exercising its powers under s. 18.

22

ii

ii. Possible difficulties with section 17

The mechanism in s. 17 is premised on the assumption that there is anarbitration agreement between the parties. It may be because the respondentdisputes this that it is unwilling to appoint an arbitrator. If so, the respondentshould, in order to avoid the jurisdictional objection being determined bythe claimant’s arbitrator as sole arbitrator, apply to the court to have thejurisdictional objection determined under s. 72(1). The respondent should couplethat application with a protective application to set aside the appointment of theother party’s arbitrator as sole arbitrator in case the court rejects its case onjurisdiction.

A further difficulty with s. 17 is that an administrative mechanism that enablesone party to unilaterally appoint its arbitrator as sole arbitrator, could, in somejurisdictions, be regarded as contrary to the parties’ agreement, or to publicpolicy requirements for equality between the parties in designating arbitrators toa three person tribunal.

23

Furthermore, there may be relationships between anarbitrator and the party which, while acceptable in the case of a party arbitratorappointed to a tribunal of arbitrators, are unacceptable for a sole arbitrator.

24

In consequence, reliance on s. 17 to constitute the tribunal may, in somejurisdictions, provide grounds for refusing recognition and enforcement of the

19

See

Mustill and Boyd,

supra

n. 10 at p. 182, considering the equivalent provision in the Arbitration Act 1950,s. 7 (now repealed). Unlike its predecessor, AA 1996, s. 17 is not limited to tribunals comprising twoarbitrators, such as those where party arbitrators are replaced, in the event of disagreement, by an umpire.It also encompasses tribunals of three, where each party appoints an arbitrator to the tribunal.

20

AA 1996, s. 17(1), (2).

21

If not, the court may refuse to exercise its discretion.

See Durtnell

v.

Secretary of State for Trade and Industry

[2000]BLR 771 (considering the court’s discretion under s. 18 but equally applicable to s. 17).

22

AA 1996, ss. 17(3), 18(1).

23

BKMI Industrieanlagen GmbH

v.

Ducto Co. (Pty) Ltd

(France, Cour de Cassation) reported in English at [1994]ADRLJ 36. Although the issue in that case was whether two respondents could be required by the ICC toappoint a single party arbitrator to a three arbitrator tribunal, while the claimant remained entitled toappoint its own arbitrator, it is difficult to see that a procedure which enabled one party to appoint its partyarbitrator as sole arbitrator would be viewed with any greater favour. But note,

Shipowner (Netherlands)

v.

Cattleand Meat Dealer (Germany)

, Germany, Bundesgerichtshif (Federal Supreme Court), 1 February 2001,

XXIX YBComm. Arb

700, where it was held that the appointment of a party arbitrator as sole arbitrator in default ofa nomination by the other party, under the GLENCON rules, did not violate public policy such that hisaward would not be enforced under article V(2) of the New York Convention. The Court refused to considerallegations that the sole arbitrator was biased because of his connection with the party appointing him,because the award had not been challenged on such grounds at the seat (England).

24

For a discussion of the somewhat anomalous position of party appointed arbitrators,

see

Redfern and Hunter,

Law and Practice of International Commercial Arbitration

(4th edn, 2004), pp. 199–201.

258


sole arbitrator’s award.

25

Thus, if it is anticipated that the award will need to berecognised or enforced outside England and Wales, it may be safer to disregardthe machinery in s. 17 and, instead, to apply to the court under s. 18 to appointan arbitrator for the defaulting party.

iii

iii. Constituting the tribunal under section 18

Section 18 provides that any party to an arbitration agreement may apply to thecourt to constitute the arbitral tribunal in a case where the procedure for theappointment of arbitrators has failed.

26

Although there is no such failure wherean appointment is duly made under s. 17, unless that appointment is set aside,

27

an application under s. 18 does not appear to be precluded merely because s. 17,although available, is not used.

On a s. 18 application, the court can constitute the tribunal by givingdirections as to the making of any necessary appointments, by directing that thetribunal shall be constituted by such appointments (or any of them) as have beenmade, by revoking any appointments made, and/or by making any necessaryappointments itself. Appointments made by the court, but not, apparently,otherwise, take effect as if made with the agreement of the parties.

28

Thus, wherea s. 18 application is made because the respondent has failed to appoint itsarbitrator to the tribunal, the appropriate relief will generally be the appointmentof the respondent’s arbitrator by the court.

29

iv

iv. Jurisdictional objections on a section 18 application

It is unclear whether, on a s. 18 application, the court must be satisfied that theparties have concluded an arbitration agreement and must, in consequence,finally determine any dispute as to the validity of the alleged agreement before

25

See

Arts V(1)(d) and V(2)(a) of the New York Convention. In

Rederi Aktiebolaget Sally

v.

Srl Temarea

(Italy, Cortedi Appello di Firenze, 13 April 1978) IV

YB Comm. Arb

. 294, the court held that a tribunal constituted inaccordance with AA 1950, s. 9(1) which provided that a tribunal of three takes effect as a tribunal of twowith an umpire, was not in accordance with the parties’ agreement, which required three arbitrators. Thus,it contravened Art. V(1)(d) of the Convention since, under that article, the curial law was only relevant in theabsence of party agreement. Similar arguments have, however, been rejected in a number of otherjurisdictions on the grounds that English curial law concerned with the constitution of the tribunal, inparticular AA 1950, s. 7 (the predecessor of AA 1996, s. 17) and s. 9(1) take effect as part of the parties’agreement since they have chosen to arbitrate in England and Wales.

See X

v.

Naviera YSA

(Spain, TribunalSupremo, 3 June 1982) XI

YB Comm. Arb

. 527;

Associated Bulk Carriers

v.

Mineral Import Export

(USA, DistrictCourt, Southern District of NY, 30 January 1980) IX

YB Comm. Arb

. 462. Possible objections to a tribunalconstituted under s. 7 of the 1950 Act under Art. V(2)(a) of the Convention (public policy) were considered,but rejected, in

Efxinos Shipping

v.

Rawi Shipping

(Corte di Appello of Geneva) VIII

YB Comm. Arb

. 381. Thewere rejected on the grounds that a sole arbitrator appointed under that provision did not lack impartiality,

per se

, and s. 7 provided a safety valve in that a court could set aside the appointment. But since only theparty seeking enforcement appeared at the hearing in that case, the arguments were not fully explored.

26

The application should be made promptly,

Durtnell

v.

Secretary of State for Trade and Industry

[2000] BLR 771.

27

See

s. 18(1).

28

AA 1996, s. 18(3), (4).

29

The advantage is that this preserves the tribunal structure agreed by the parties and most closely mirrors theequivalent power under art. 11(4) of the Model Law.


259

considering its discretion to constitute the tribunal.

30

It was said by Thomas J. in

Vale de Rio Doce Navegaçao SA

v.

Shanghai Bao Steel Ocean Shipping Co Ltd

31

that thiswas not the case. He considered that the court need only be concerned withwhether there was sufficient on the material before it to enable it to appoint anarbitrator. It was for the arbitral tribunal to give a definitive ruling on the validityof the arbitration agreement under s. 31, or for the court to deal with thatquestion on an application under s. 32. On the other hand, in

Atlanska Plovidba

v.Consignaciones Asturianas SA32 it was held that before the court could exercise itsjurisdiction under s. 18 it had to be satisfied that there was a valid arbitrationagreement between the parties and that an effective notice of arbitration hadbeen served.

There was a similar debate about how the court should deal with disputesabout the existence of an arbitration agreement on an application under s. 9 ofthe 1996 Act to stay court proceedings said to have been brought incontravention of that agreement.33 But, after some initial uncertainty, the Courtof Appeal concluded that, where a court was acting under this statutory power,rather than its inherent jurisdiction, it has to find that there was a validarbitration agreement binding the parties before it could stay the proceedingsbefore it.34 Applying similar reasoning to s. 18 which, like s. 9 is predicated ontheir being an arbitration agreement between the parties, suggests that the courtcannot exercise its discretion under s. 18 without first concluding that the partieshave agreed to arbitration. Moreover, it is difficult to see why a person whodisputes that it has agreed to arbitration should have an arbitrator foisted on it bythe court on a s. 18 application so that the issue can be decided by an arbitraltribunal prior to the matter coming back to the court on a s. 67 challenge. It isalso difficult to see why, since the matter is already before the court, it is not costeffective and in the interest of good litigation management for the court to dealwith the question at that time. Thomas J.’s suggestion that the court need not doso because, in appointing an arbitrator, it is doing no more than the party indefault should have done35 begs the question of why a party who disputes the

30 This was the position under s. 7 of the 1950 Act, Mark Rich and Co. AG v. Societa Italina Impianti [1989] 1Lloyd’s Rep. 548 at 549.

31 [2000] 2 Lloyd’s Rep. 1 at 11. Thomas J. found support for his view in the opinion of the Advocate-Generalin ECJ reference Mark Rich and Co. AG v. Societa Italina Impianti [1991] 1 ECR 3855 at 3874, para. 27. But itis difficult to see the relevance of the Advocate-General’s opinion to this question. The issue in that case waswhether an application to a court to appoint an arbitrator ceased to be within the arbitration exception inArt. 1(4) of the Legano Convention if, on that application, the respondent disputed the existence of thearbitration agreement. The Advocate-General was not concerned with whether, on such an application, theexistence of the arbitration agreement should be determined by a national court or by an arbitral tribunal.It was, in any case, common ground between the parties that, on an application under Arbitration Act 1950,s. 7 (the then relevant provision), the court had to find that they had concluded a valid arbitration agreementbefore it could consider its discretion to make an appointment; see [1991] 1 ECR 3855 at 3873, para. 25.

32 [2004] 2 Lloyd’s Rep. 109. An effective notice of arbitration was necessary because in that case, theappointment process only commenced after the notice of arbitration was served, thus it could not be said tohave broken down if an effective notice of arbitration had not been served.

33 AA 1996, s. 9 gives effect to Art. II of the New York Convention.34 Al-Nami v. Islamic Press Agency [2000] 1 Lloyd’s Rep. 522 at 524 and 528 (CA).35 [2000] 2 Lloyd’s Rep. 1 at 12.

260 Arbitration International, Volume 21 Number 3

existence of an arbitration agreement has, nevertheless, agreed to that disputebeing resolved by an arbitral tribunal!

In practice, however, uncertainties over the ambit of s. 18 can be readilyavoided, as was done in Sinochem v. Fortune Oil Ltd,36 if the respondent to anapplication under s. 18 makes a cross-application under s. 72(1) for a declarationthat it is not a party to the arbitration agreement. In Sinochem v. Fortune Oil Ltd, thecourt gave directions for a trial of a preliminary issue concerned with the validityof the arbitration agreement and, having decided that question in therespondent’s favour, dismissed the s. 18 application.

c

c. Jurisdictional Objections by a Participant in the Arbitration

A participant in arbitral proceedings is not barred from raising jurisdictionalobjections in the course of the arbitration merely because it has appointed orparticipated in the appointment of an arbitrator.37 But, thereafter, andirrespective of whether or not the tribunal has power to rule on its ownjurisdiction, it has only a limited period in which to raise objections to thetribunal’s substantive jurisdiction, albeit the tribunal can admit late objections if itconsiders the delay is justified.38

An objection to the tribunal’s jurisdiction will be concerned with whether thereis a valid arbitration agreement, whether the tribunal is properly constituted andwhether the matters in question have been submitted to arbitration in accordancewith the arbitration agreement.39 A contention that a contract containing anarbitration clause is void is not, of itself, a challenge to the tribunal’s jurisdiction.Under the doctrine of separability, the arbitration agreement may not be affectedby the contract’s invalidity. If the validity of the arbitration clause is disputed aswell, this should be made clear; otherwise the right to challenge the tribunal’saward on jurisdictional grounds may be lost.40

i

i. Objections to the tribunal’s jurisdiction at the outset

Under s. 31(1) of the 1996 Act, an objection that the tribunal lacks substantivejurisdiction at the outset must be raised not later than the time that the objectingparty takes its first step in the arbitral proceedings to contest the merits of anymatter in relation to which it challenges the tribunal’s jurisdiction.41

This requirement was considered in Athletic Union of Constantinople v. NationalBasketball Association.42 The court held that initial communications between the

36 [2000] 1 Lloyd’s Rep 682.37 AA 1996, s. 30(1).38 AA 1996, s. 31(2), (3). The tribunal’s powers under s. 30 can be excluded by agreement of the parties. The

procedures in s. 31 are mandatory, see s. 4(1).39 AA 1996, s. 30(1).40 Vee Networks Ltd v. Econet Wireless International Ltd [2005] 1 Lloyd’s Rep. 192.41 Based on, but more ambiguously worded than, art. 16(2) of the Model Law.42 [2002] 1 Lloyd’s Rep. 305 (Deputy Judge Field QC). The arbitration was being conducted under the

UNCITRAL Model Rules, which give the respondent the right to serve a defence.

Jurisdictional Disputes under the Arbitration Act 1996: A Procedural Route Map 261

parties and the arbitral tribunal concerned with administrative and earlypreparatory matters did not constitute ‘a step in the arbitral proceedings tocontest the merits of any matter’ and concluded that, on the facts of the case, thefirst such step was the service of a defence on the merits. The wording of s. 31(1)does, however, seem to envisage that a first step to contest the merits might betaken before service of a defence. Thus, in Capital Trust Investments Ltd v. RadioDesign AB 43 which concerned the somewhat similar wording of s. 9 of the 1996Act (which provides that an application for a stay of legal proceedings cannot bemade by a person after it has ‘taken any step in those proceedings to answer thesubstantive claim’), the Court of Appeal held that a step in the proceedings toanswer a substantive claim was one that demonstrated an election to abandon theright to a stay in favour of allowing the action to proceed and which had theeffect of invoking the jurisdiction of the court.

If similar principles apply to s. 31(1), communications with the tribunal orattendance at a meeting called by it would not, of themselves, bar a laterobjection to the tribunal’s jurisdiction at the outset. But a request to the tribunalto exercise its discretion, for instance to give directions for service of a defence,would be a step in the proceedings to contest the merits. Assuming the applicablearbitral rules did not give a right to serve a defence, such a request would notonly evidence an intention to abandon any objection to the tribunal’s substantivejurisdiction at the outset, but would invoke the tribunal’s jurisdiction.44

ii

ii. Objections that the tribunal is exceeding its jurisdiction

Under s. 31(2) of the 1996 Act, an objection arising during the course of arbitralproceedings that the tribunal is exceeding its substantive jurisdiction ‘must bemade as soon as possible after the matter alleged to be beyond the tribunal’sjurisdiction is raised’.45

These words were considered in Hussman (Europe) Ltd v. Al Ameen Development &Trade Co,46 where the court considered that they focused on when the objectingparty knew, or could with reasonable diligence have discovered, the grounds forthe objection. Thus, it held that the respondent was not barred from raising a

43 [2002] 2 All ER 150 (CA).44 See comment to this effect in Patel v. Patel [2000] QB 551 (CA) (also concerned with AA 1996, s. 9). Patel v.

Patel was cited in Athletic Union of Constantinople v. National Basketball Association, but the Athletic Union does notappear to have sought the tribunal’s permission to serve a defence, presumably because art. 19 of theUNCITRAL Model Rules gave it the right to do so.

45 Based on art. 16(2) of the Model Law.46 [2001] 2 Lloyd’s Rep. 83. The objection was that the company in whose name the arbitration was being conducted

was not a party to the arbitration agreement. Such an objection might, conceptually, be regarded asconcerned with a lack of substantive jurisdiction at the outset (s. 31(1)), since it suggests that the tribunal hadno jurisdiction at all, rather than as being concerned with an excess of jurisdiction (s. 31(2)), which impliesthat the tribunal has some jurisdiction. But it appears to have been assumed by those involved in the case, orat any rate by the applicant, that the difference in wording between s. 31(1) and (2) was only concerned withthe time at which the grounds of the objection arose, not with whether the objection went to the whole oronly part of the tribunal’s jurisdiction. This assumption was shown to be erroneous when the matter cameback to the court as Hussman (Europe) Ltd v. Ahmed Pharam [2003] EWCA (Civ) 266 (Lawtel), discussed infra.


jurisdictional objection on the first day of the hearing of the merits when it wasonly on that day that the claimant disclosed previously requested information thatprovided the basis for that objection.

iii

iii. Statutory waiver (AA 1996, s. 73(1))

The need for objections to the tribunal’s substantive jurisdiction to be raisedwithin the periods provided for in s. 31, or to persuade the tribunal to admit theobjection late, is reinforced by the statutory waiver in s. 73(1). This provides thata party to arbitral proceedings who takes part or continues to take part in thoseproceedings without making, either forthwith or within such time as allowed bythe arbitration agreement47 or by the tribunal or by any provision of Part I of the1996 Act (which includes s. 31), any objection that the tribunal lacks substantivejurisdiction, may not raise that objection later, either before the tribunal or thecourt, unless it shows that, at the time it took part or continued to take part in theproceedings, it did not know and could not with reasonable diligence havediscovered the grounds for the objection.48

It is for the party relying on the statutory waiver as a bar to an objection toshow that the party raising that objection has taken part in the arbitration.49

A person takes part in arbitral proceedings if it commences those proceedings,if (query) it appoints or participates in the appointment of an arbitrator, if itattends before the tribunal, or if, having regard to any applicable arbitration rules,it invites the tribunal or any relevant institution to decide on any matter of procedureor substance.50 Once a person has started to take part in the proceedings, it continuesto do so merely by allowing the proceedings to continue, even if no further positivesteps are required of or taken by it; for example, during the period when thetribunal is preparing its final award up to the date of publication of that award. Aparty who no longer wishes to take part in an arbitration must make clear that itis withdrawing from the proceedings.51 But withdrawal does not, of itself, enableobjections that are already barred by operation of the statutory waiver to be

47 AA 1996, s. 73(1)(a). Section 73(1) is not concerned only with jurisdictional objections (see s. 73(1)(b)-(d)) butthe other matters it covers are not relevant to this article. For an example of arbitral rules that provide forwhen jurisdictional objections must be taken, see art. 21(3) of the UNCITRAL Arbitration Rules, discussedin Athletic Union of Constantinople v. National Basketball Association [2002] 1 Lloyd’s Rep. 305.

48 AA 1996, s. 73(1). The equivalent provision in art. 4 of the Model Law is significantly narrower in scope.49 Rustal Trading Ltd v. Gill & Duffus SA [2000] 1 Lloyd’s Rep. 16. But note Vee Networks Ltd v. Econet Wireless

International Ltd [2005] 1 Lloyd’s Rep. 192, where the court took the s. 73(1) point of its own motion.50 Such conduct would be sufficient participation to deprive a person of recourse to the court under s. 72(1),

even though appointing or participating in the appointment of an arbitrator does not affect a party’s right toraise jurisdictional objections before the tribunal, s. 31(1). Compare Caparo Group Ltd v. Fagor Arrasate SociedadCooperativa [2000] ADRLJ 254 (where there was no participation) with Rustal Trading Ltd v. Gill & Duffus SA[2000] 1 Lloyd’s Rep. 14, Vale de Rio Doce Navegaçao SA v. Shanghai Bao Steel Ocean Shipping Co. Ltd [2000] 2Lloyd’s Rep. 1, and JT Mackley & Co. Ltd v. Gossport Marina Ltd [2002] BLR 367; Vee Networks Ltd v. EconetWireless International Ltd [2005] 1 Lloyd’s Rep. 192 (where there was participation).

51 Rustal Trading Ltd v. Gill & Duffus SA [2000] 1 Lloyd’s Rep. 16. But note Wicketts v. Brine Builders (2002) CILL1805 (TTC) where (Rustal Trading Ltd v. Gill & Duffus SA not being cited) the judge in an extemporejudgment, said, somewhat tentatively, that a party who expressed resistance to directions which it (and thecourt subsequently) considered misconceived did not, by doing so, continue to take part in the proceedings.


revised. It merely prevents the statutory waiver barring objections where groundsfor those objections arose at the time of the withdrawal or subsequently.52

If participation is shown, it is for the party seeking to avoid the effect of s. 73(1)to show, by adducing evidence as necessary, that it raised its objection in due timeor, if it did not do so, that the reason for the failure was that it did not know andcould not with reasonable diligence have discovered the grounds for thatobjection.53 Reasonable diligence may, in this context, involve the obtaining ofappropriate legal advice.54

Under s. 73(1), an objection is raised in due time if it is made forthwith, that ispromptly, without unnecessary delay, this being a question of fact,55 or if it ismade within such time as is allowed in the arbitration agreement, the tribunal orby any provision of Part I of the 1996 Act. Compliance with any of these timelimits sufficient. For example, an objection to the tribunal’s jurisdiction that is notmade before taking the first step in the proceedings to contest the merits, asrequired by s. 31(1) of the 1996 Act, will not be barred if it is made within thetime allowed for such objections in the parties’ agreement.56

An expression of general concern about the proceedings is not an objection forthe purpose of s. 73(1). In the case of a jurisdictional objection, it is necessary toalert the tribunal and the other party to the flaw that the objecting partyconsiders invalidates the arbitral process and to object to the tribunal continuingto act.57 The objection need not be made in any particular form, for instance inwriting or by commencing legal proceedings.58 But writing is desirable to avoidlater disputes about what was said.

iv

iv. Relationship between AA 1996, ss. 31 and 73(1)

It is surprising that there is no equivalent, in s. 31, to the residual entitlement ins. 73(1) to raise objections out of time where the grounds for the objection werenot previously known and could not, with reasonable diligence, have beendiscovered. In consequence, the right to raise jurisdictional objections ispotentially wider under s. 73(1) than under s. 31, a difference that was raised inHussman (Europe) Ltd v. Al Ameen Development & Trade Co.59 but was not fullyexplored because the jurisdictional objection to Al Ameen’s participation in thearbitration on the grounds that it was not a party to the arbitration agreementwas regarded as concerned with an excess rather than a lack of substantive

52 cf. Wicketts v. Brine Builders (2000) CILL 1805.53 Rustal Trading Ltd v. Gill & Duffus SA [2000] 1 Lloyd’s Rep. 16; JSC Zestafoni G Nikoladze Ferroalloy Plant v. Ronly

Holdings Ltd [2004] 2 Lloyd’s Rep. 335.54 Selina Mohsin v. Commonwealth Secretariat [2002] EWHC 377 (Comm) (Lawtel).55 Wicketts v. Brine Builders (2002) CILL 1805 (TTC).56 See the discussion on this point in Athletic Union of Constantinople v. National Basketball Association [2002] 1 Lloyd’s

Rep. 305. But note paras 41, 42 where it was said that a party who disputes the validity of the arbitrationagreement cannot rely on a term of that agreement as entitling it to raise jurisdictional objections outside theperiod for making such objections provided for in AA 1996, s. 31.

57 Rustal Trading Ltd v. Gill & Duffus SA [2000] 1 Lloyd’s Rep. 16 at 20.58 Wicketts v. Brine Builders (2002) CILL 1805 (TTC).59 [2001] 2 Lloyd’s Rep. 83.


jurisdiction. Thus, the court held that the objection was governed by s. 31(2) andcould be taken as soon as possible after the matter alleged to be beyond thetribunal’s jurisdiction was raised and equated this requirement with thereasonable diligence test in s. 72(1), the court saying that the purpose of bothtests was the same, to ensure that a party did not keep a point ‘up his sleeve’ andwait and see what happened while considerable expense was incurred in thearbitration. If, however, the question of Al Ameen’s participation in thearbitration had been characterised as an objection to the tribunal’s substantivejurisdiction at the outset,60 it would have had be raised under s. 31(1) beforetaking a step to contest the merits of the matter. If so, the court could not have soreadily have elided the requirements of s. 31 with those of s. 73(1). It would havehad to consider the status a jurisdictional objection barred under s. 31 but notunder s. 73(1) of the 1996 Act. The relationship between s. 31 and s. 73(1) wasrecently considered in Vee Networks Ltd v. Econet Wireless International Ltd,61 where itwas said that a party wishing to challenge the tribunal’s jurisdiction before thecourt had to bring itself within one section or the other.

In many cases, however, the difference between the available periods forraising jurisdictional objections under s. 31 and s. 73(1) is likely to be academic.The tribunal has, under s. 31(3), discretion to admit late objections and is likely toaccept that a valid reason for doing so is that the grounds for the objection werenot known and could not, with reasonable diligence, have been discovered earlier.Indeed, it is arguable that the tribunal would have to admit a late objection onthis ground since s. 73(1) governs when objections can be raised, not just beforethe court, but also before an arbitral tribunal.

v

v. Obtaining the tribunal’s ruling on its substantive jurisdiction

If the jurisdictional objection is raised in due time or is admitted late by thetribunal then, unless the parties have agreed to exclude its power to do so or haveagreed which course of action it should take, the tribunal may either rule on thematter in an award as to jurisdiction or deal with the objection in its award on themerits.62 Unlike under the old law, the tribunal is no longer impotent in the faceof a party or alleged party who raises and then reserves a jurisdictional objectionthroughout the proceedings with a view to relying on that objection if thetribunal’s award is unfavourable. Rather, it will be for the tribunal to decide whenit rules on that objection by award. Once it has done so, its award will be finaland binding on the parties unless, within the limited period available, it isquestioned by proceedings in court under s. 67.63

vi

60 This being, apparently, how the court in Hussman viewed it. See Hussman (Europe) Ltd v. Ahmed Pharam [2003]EWCA (Civ) 266 (Lawtel).

61 [2005] 1 Lloyd’s Rep. 192.62 AA 1996, s. 31(4).63 See also AA 1996, ss. 58, 70(3), 73. If this is not done, the jurisdictional objection cannot be relied on to resist

the tribunal’s award on the merits; People’s Insurance Company of China v. Vysanthi Shipping Corporation [2003] 2Lloyd’s Rep. 617.


vi. Which course of action should the tribunal adopt?

In deciding whether to deal with the objection by separate award on jurisdictionor in an award, whether partial or final, on the merits, the tribunal must act fairlyand impartially having regard to the circumstances of the case and the need toavoid unnecessary delay and expense.64 The tribunal’s decision on which courseto follow will not, of itself, provide grounds for a challenge to the subsequentaward for serous irregularity unless the decision is one that no reasonabletribunal, appraised of these principles and having regard to the relevantcircumstances, could reach.65

If the objection is to the tribunal’s jurisdiction at the outset it will usually, otherthan in simple matters, be appropriate to rule on that objection by award onjurisdiction or partial award on the merits. This minimises the risk of delays andwasted costs that might otherwise occur if the tribunal, having proceeded to afinal award on the merits, is then found not to have jurisdiction. If the tribunaldoes decide to deal with the jurisdictional objection in this way, it will givedirections for the exchange of evidence and submissions on the jurisdictionalquestion and, if material facts are disputed, will have to consider how theevidence can be tested. This may require an oral hearing.

If the jurisdictional objection concerns whether the parties have agreed toarbitrate, it may be bound up with the question of whether the parties concludeda contract governing their commercial dealings, a major issue in the substantivedispute between them. If the tribunal concludes that it does have jurisdiction, itsaward will necessarily deal with the merits of that issue and there can be noobjection to it doing so.66 But if the tribunal concludes that it does not havejurisdiction, the award should not deal with any aspect of the merits of theparties’ dispute, such as whether the parties did conclude a contract governingtheir commercial relationship. It should only deal with the jurisdictional question;did the parties agree to arbitrate.67

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vii. Challenging the tribunal’s ruling as to its substantive jurisdiction

Once the tribunal has ruled the jurisdictional objection by award, any party tothe proceedings may question that ruling in court by application under AA 1996,s. 67.68 On such an application, the court is not limited to reviewing the award,but may rehear the jurisdictional objection, with oral evidence if necessary,69 noris the evidence that can be adduced before the court limited to that submitted tothe arbitral tribunal, although, if evidence is adduced late, it may attract a degreeof scepticism and affect how the court deals with costs.70

64 AA 1996, s. 33.65 Aoot Kalmneft v. Glencore International AG [2002] 1 Lloyd’s Rep. 128.66 ibid.67 LG Caltex Gas Co. Ltd v. China National Petroleum Corp. [2001] 2 All ER (Comm.) 97 at 117 (CA).68 A mandatory provision that cannot be excluded by the parties, see s. 4(1).69 Azov Shipping Co. v. Baltic Shipping Co. [1999] 1 Lloyd’s Rep. 68.70 Electrosteel Castings Ltd v. Scan Trans Shipping & Chartering Sdn Bhd [2003] 1 Lloyd’s Rep. 190.


The right to bring the jurisdictional objection to the court under s. 67 is, alsosubject to the following restrictions. The application may not be brought beforethe applicant has exhausted any available arbitral process of appeal or review andany available recourse under s. 57.71 If it has not done so, the application will bedismissed.72

The application must be brought within 28 days of the date of the award or, ifthere has been any arbitral process of appeal or review, within 28 days of the dateon which the applicant was notified of the result of that process.73 The court does,however, have a broad discretion to extend this 28-day period irrespective ofwhether or not it has already expired.74 Moreover, if the tribunal has been asked,under s. 57, to correct slips, omissions or ambiguities in its award,75 the 28 daysruns from the date of the corrected award, not the date of the original award.76

Although, the evidence that can be adduced before the court is not limited tothat submitted to the arbitral tribunal, a party cannot, ordinarily, raise newjurisdictional points before the court that, having regard to the pleadings andsubmissions in the arbitration, were not argued before the arbitral tribunal priorto its award.77 It will only be able to do so if it can show that at the time it madesubmissions on the jurisdictional objection to the tribunal, it did not know andcould not, with reasonable diligence, have discovered the ground for the newpoint.78

The court can, on an application under s. 67, order that monies payable underthe award be brought into court or otherwise secured.79 This power is somewhatanomalous since it is not expressly provided for where the jurisdictional objectioncomes before the court by any other route provided by the 1996 Act,80 and it maybe a matter of accident which route is adopted. Thus, the court is likely to be

71 AA 1996, ss. 67(1), 70(2). The availability of an arbitral process of appeal or review will depend on theapplicable arbitration rules. See, for examples of such procedures, arts 11 and 12 of 1998 ICC Rules and arts10 and 11 of 1998 LCIA Rules.

72 Groundshire v. VHE Construction [2001] BLR 395 at 405.73 AA 1996, ss. 67(1), 70(3).74 The discretion arises under AA 1996, s. 80(5) and CPR Rules 3.1.3 and 62.9. See Aoot Kalmneft v. Glencore

International AG [2002] 1 Lloyd’s Rep. 128. In People’s Insurance Company of China v. Vysanthi Shipping Corporation[2003] 2 Lloyd’s Rep. 617, the court refused to extend time where the delay was very substantial, thedecision not to challenge the tribunal’s award earlier had been deliberate, neither the arbitrator nor theparty seeking to enforce the tribunal’s award on the merits had contributed to the delay, and the delay hadcaused prejudice to that party.

75 Section 57 (the slip rule) is concerned not just with the tribunal’s power to correct its award so as to removeclerical mistakes or errors arising from accidental slips or omissions. It also enables the tribunal to clarify orremove any ambiguities, or make an additional award in respect of claims presented to it but not dealt with.

76 Al Hadha Trading Co. v. Tradigrain SA [2002] 2 Lloyd’s Rep. 512.77 AA 1996, ss. 67(1), 73(1); Athletic Union of Constantinople v. National Basketball Association [2002] 1 Lloyd’s Rep.

305 (Deputy Judge Field QC). Since Athletic Union’s arguments before the arbitral tribunal were concernedwith whether the apparent arbitration agreement it had concluded with the NBA was enforceable, s. 73(1)barred it from arguing before the court that the parties had never concluded an arbitration agreement at all;JSC Zestafoni G Nikoladze Ferroalloy Plant v. Ronly Holdings Ltd [2004] 2 Lloyd’s Rep. 335.

78 AA 1996, s. 73(1).79 ibid. s. 70(1), (7).80 ibid. s. 70 does not govern recourse to court in respect of a jurisdictional objection under either s. 32 or s. 72

of the Act.


cautious in its exercise, at any rate where the jurisdictional objection concernswhether the objecting party agreed to arbitrate a particular dispute at all for, insuch a case, why should there be any presumption in favour of the award. It wasfor reasons such as these that in Peterson Farms Inc. v. C&M Farming Ltd,81

Tomlinson J. suggested that the party seeking such an order had to show, as athreshold condition, that the jurisdictional objection was flimsy or otherwiselacked substance.

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viii. Types of award that can be the subject of a section 67 application

Somewhat oddly, the remedies that the court can grant on a s. 67 applicationdiffer depending on whether the award being challenged is an award as to thetribunal’s substantive jurisdiction or an award on the merits. Thus, when makinga s. 67 application, it is necessary to categorise the award either as oneconcerning the tribunal’s substantive jurisdiction or one concerned with themerits. This can create difficulties if the jurisdictional objection on which thetribunal has ruled interrelates with part of the substantive dispute between theparties. In such a case, the nature of the tribunal’s award depends on whether ornot it concludes that it has jurisdiction. If the tribunal rules that it does not havejurisdiction, its award is an award as to its substantive jurisdiction, since thetribunal is precluded from dealing with any aspect of the merits of the parties’dispute.82 If the tribunal rules that it has jurisdiction, its award will be an awardon the merits since, in reaching its conclusion, it will have determined the relatedsubstantive issue.83

ix

ix. The remedies available on a section 67 application84

In the case of an award as to the tribunal’s substantive jurisdiction, the court canconfirm the award, vary the award (in which case the variation takes effect as partof the award), or set the award aside in whole or in part.85 In the award is on themerits, the court can declare the award to be of no effect in whole or in partbecause the tribunal did not have substantive jurisdiction.86

81 [2004] 1 Lloyd’s Rep. 614.82 LG Caltex Gas Co. Ltd v. China National Petroleum Corp. [2001] 2 All ER (Comm.) 97 (CA).83 As was, e.g., the award considered in Aoot Kalmneft v. Glencore International AG [2002] 1 Lloyd’s Rep. 128.84 Apart from failing to provide recourse to the court to challenge a tribunal’s ruling declining jurisdiction, a

serious oversight, the Model Law provides a simpler and more rational procedure bringing jurisdictionalobjections to the court. Thus, where a tribunal rules on its own jurisdiction, the relevant court can, underart. 16(3), be requested to ‘decide the matter’, i.e. to decide whether the tribunal has jurisdiction. If thematter is dealt with in an award on the merits, then, under art. 34, the relevant court can, on application, setaside the award if it is proved (making it clear that this is a matter to be decided by the court) that thetribunal did not have jurisdiction (see art. 34(2)(a)(i), (iii) and (iv)). For a consideration of how negativedecisions on jurisdiction are dealt with in other jurisdictions, see S Kröll, ‘Recourse against NegativeDecisions on Jurisdiction’ in (2004) 20 Arb. Int’l 155.

85 AA 1996, ss. 67(1)(a), (3), 71(3).86 ibid. s. 67(1)(b).


It was said in Hussman (Europe) Ltd v. Ahmed Pharam,87 that there is no differencein principle or effect between a declaration that an award is of no effect in wholeor in part and an order setting aside an award in whole or in part. In either case,the tribunal is no longer functus officio as regards the matters decided in the invalidaward, and the arbitration continues or revives as necessary.88 The revival of thetribunal’s jurisdiction is not dependent on the invalid award being remitted to itfor reconsideration.89 In one respect, however, the two remedies are different. Inthe former case, the court can, if satisfied that the tribunal did not havejurisdiction to make the award in question, grant a declaration determining thejurisdictional question and that will, ordinarily, be the end of the jurisdictionaldispute. In the latter case, the court has no express power to grant such a declaration.It can only set aside the tribunal’s award, a remedy which, considered in isolation,leaves the question of the tribunal’s jurisdiction in a state of uncertainty90 since,ordinarily, as in the case of a successful challenge for serious irregularity or appealon a question of law, the setting aside of its award would necessitate the tribunalreconsidering the matter in the light of the court’s determination, and making anew award – it being that award which binds the parties.

It is difficult to believe that it was Parliament’s intention that the tribunalwould do this where the award set aside concerned its substantive jurisdiction,particularly if the reason why the award was set aside was because the courtconcluded that the tribunal did not have substantive jurisdiction. But, if not, whywas the court not empowered on all s. 67 applications to grant the remediesnormally associated with its determination of jurisdictional questions,declarations and injunctions? This could have been done by giving any party toarbitral proceedings the right to challenge either an award of the tribunal as to itssubstantive jurisdiction or an award on the merits by proceedings in court for adeclaration as to the existence or extent of the tribunal’s substantive jurisdiction,giving the court power, on such an application, to grant injunctions or otherappropriate relief.91

87 [2003] EWCA (Civ) 266 (Lawtel). The tribunal’s earlier award was set aside in previous proceedings, notdeclared to be of no effect.

88 This means that a tribunal that has wrongly determined that it did not have jurisdiction, will be seized of thereference. For a discussion of the other possibilities, see S Kröll, ‘Recourse against Negative Decisions onJurisdiction’ in (2004) 20 Arb. Int’l 155.

89 If this is right, s. 71(4) of the 1996 Act (which provides that, where an award is set aside or declared of noteffect, the court may order that any provision that an award is a condition precedent to the bringing of legalproceedings is of no effect) does not appear to have any function. Since remedies granted against an awarddo not effect the validity or otherwise of the parties’ arbitration agreement, or proceedings commencedunder it, it is difficult to see what would be achieved by an order under s. 71(4), since the parties would stillbe obliged to arbitrate their dispute. There was a similar provision in the 1950 Act but that Act, unlike underthe 1996 Act, also gave the court power to order that an arbitration agreement was to cease to have effect.See AA 1950 s. 25(2)(b) (now repealed).

90 It may be that the court’s determination of the jurisdictional question, even though not the subject of itsjudgment, will bind the parties under the doctrine of issue estoppel per res judicata discussed in The Sennar (No.2) [1985] 1 WLR 490 (HL). Note also Fidelitas Shipping Co. Ltd v. V/O Exportchleb [1965] 1 Lloyd’s Rep. 223(CA).

91 This suggestion is modelled on s. 72(1) of the 1996 Act.


It may be that, in the absence of such a reform, the court could deal with theuncertainties over the remedies available under s. 67 and their effect by grantingdeclarations as to the tribunal’s jurisdiction and, if appropriate, injunctions underits inherent powers. But it is by no means clear that it will do so, since the 1996Act enjoins the court from intervening in arbitral proceedings except as providedby Part I of the 1996 Act and, in consequence from granting relief other than thatexpressly provided for in s. 67.92

The other two remedies available to the court on a s. 67 challenge to an awardas to the tribunal’s substantive jurisdiction, variation or confirmation of theaward, do not assist in overcoming these difficulties.

It is possible that Parliament considered that there was no need for the court togrant declaratory or injunctive relief on a challenge to a tribunal’s award as to itssubstantive jurisdiction since it had power to vary that award to give effect to itsown findings on the jurisdictional question. But this remedy, which is peculiar toEnglish arbitral law, merely creates uncertainty about whether the determinationis that of the court or the tribunal, and over where the determination is recorded;there being no mechanism for the award to be physically rewritten to give effectto the court’s variation.93 Courts in other jurisdictions may find difficulty inunderstanding how an award, which is the composite product of the deliberationsof the tribunal and the court, could be recognised or enforced under the NewYork Convention.94 Moreover, how, in the case of an award varied by the court,can a duly authenticated original or a certified copy be provided as required bythat Convention?95

As for the alternative option, confirmation of the award, it is difficult to seewhy this remedy was considered necessary or, if necessary, why it was not alsoprovided for in the case of an unsuccessful application to declare an award on themerits of no effect. If dismissal of the application is sufficient in the latter case,why is it not sufficient in the former case? Confirmation of the award by the courtalso raises the same conceptual problems as variation of the award by the court.On proceedings for recognition, is it the court’s judgment or the award that is

92 See AA 1996, s. 1(c); Welex AG v. Rosa Maritime Ltd [2003] 2 Lloyd’s Rep. 509, para. 30 (CA).93 These criticisms were made some 15 years ago, see Mustill and Boyd, supra n. 10 at pp. 617–618. They

appear to have been overlooked by the Departmental Advisory Committee, the body responsible for draftingthe 1996 Act.

94 The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958. See NideraHandelscompagnie BV v. Moretti Cereali SpA (Italy, Corte di Appello, Florence, 1 December 1980) X YB Comm.Arb. 450. In that case the Italian court held that the New York Convention did not apply to an English awardthat had been subject to the (now repealed) special case procedure under which a tribunal renderedalternative awards stating that one would be valid depending on how the court decided the various questionsasked of it. The Italian court’s reasoning was that, although arbitration was involved as an indispensablepremise to the second juridical phase, the intervention of the court was the last and final stage. Thus, it wasthe court’s judgment that was the subject of the enforcement proceedings, not an arbitral award. Thisreasoning appears to be equally, if not more, applicable where an arbitral award is varied by the court sincethe court’s decision is an indispensable part of what is to be enforced. Furthermore, it is implicit in theItalian court’s reasoning that the question, ‘What is an award?’ is a matter for the enforcing state, not for thearbitral law of the seat. If so, the deeming provision of AA 1996, s. 71(2) may not have the intended effectwhere recognition or enforcement is sought outside England and Wales.

95 Article IV(1)(a).


being recognised and enforced, particularly where the court agrees that thetribunal has jurisdiction but for different reasons to those given by the tribunal?96

x

x. Relationship between section 67 and the statutory waiver, section 73(2)

Section 73(2) of the 1996 Act provides that where an arbitral tribunal rules that ithas substantive jurisdiction and a party to the proceedings, who could havequestioned that ruling by any available arbitral process of appeal or review, or bychallenging the award, does not do so or does not do so within the time allowedby the arbitration agreement or any provision of Part I of the 1996 Act (whichincludes s. 67), it may not object later to the tribunal’s substantive jurisdiction onany ground which was the subject of that ruling.

It is unfortunate that s. 73(2) refers to an award being challenged, since thisleads to uncertainty as to whether the statutory waiver only applies where thetribunal’s ruling is embodied in an award as to its substantive jurisdiction and notwhere that ruling is embodied in an award on the merits. This is because, unders. 67, it is only awards as to the tribunal’s substantive jurisdiction that areexpressly subject to challenge.97 Furthermore, s. 31(4) distinguishes between atribunal ruling on jurisdictional objections by award as to its substantivejurisdiction, and dealing with such objections in an award on the merits. Sinceonly rulings on jurisdiction are referred to in s. 73(2) this may be regarded assupporting the view that the statutory waiver was only intended to apply toawards as to the tribunal’s substantive jurisdiction.98

It is to be hoped that a court, faced with these uncertainties, would construes. 73(2) broadly as concerned with ensuring that once the tribunal has, under itspower in s. 30, ruled that it has substantive jurisdiction, whether by award as toits substantive jurisdiction or in an award on the merits, a party cannot,subsequently, object to the tribunal’s substantive jurisdiction on a ground that wasthe subject of that ruling other than by application under s. 67 or by any availablearbitral process of appeal or review. If necessary, a similar result could beachieved by applying the common law principle that enforcement of an awardcannot be resisted on any ground that could have been relied on to question thataward after it was made.99 This principle may also provide an answer to the otherlacunae in s. 73(2), that is, where the jurisdictional objection is duly made, or thetribunal has admitted it out of time, but the tribunal does not then rule on (or

96 See Nidera Handelscompagnie BV v. Moretti Cereali SpA, discussed supra.97 Compare AA 1996, s. 67(1)(a) with s. 67(1)(b).98 The reason for the use of different terminology in s. 31(4)(b) and (4)(a) is difficult to fathom. Both are

concerned with the exercise of the tribunal’s power under s. 30, this being a power to rule on its ownsubstantive jurisdiction.

99 Scrimaglio v. Thornett & Fehr [1924] 18 LlL Rep. 148 (CA), Termarea SRL v. Rederiaktibolaget Sally [1979] 2Lloyd’s Rep. 439; Mustill and Boyd, supra n. 10 at 546. At the time when these cases were decided, theprincipal statutory ground for challenging an award was misconduct and the court’s concern was to preventa party circumventing the statutory time limits for such a challenge by alleging misconduct as a defence toenforcement. It remains to be seen whether this principle will be extended to all the statutory grounds fordisputing an award available under the 1996 Act (see ss. 67, 68 and 69), all of which are subject to a 28-daytime limit, see s. 70.


deal with) the objection by award. Other than through oversight, this could occurwhere the parties, by agreement, exclude the tribunal’s power to rule on its ownjurisdiction. Section 73(2) does not deal with this possibility, but since thetribunal’s award on the merits could still be questioned under s. 67 onjurisdictional grounds,100 a party who failed to do so might, at common law, beprevented from contesting the tribunal’s jurisdiction on enforcement proceedings.

xi

xi. Implications of the statutory waiver for a non-participant

It is doubtful that the statutory waiver in s. 73(2) is intended to apply to a personalleged to be a party to arbitral proceedings but who takes no part in theproceedings. There is, however, some uncertainty about this since, although thewords ‘a party to the proceedings’ are used widely in the 1996 Act, including inss. 32, 67 and 73, they are not defined.

One possible interpretation is that ‘a party to the proceedings’ is someone whoparticipates in arbitral proceedings, this being a question of fact which is notconcerned with the legal question of whether that person is a party to a validarbitration agreement or with whether the proceedings have been validlycommenced against it.101 If so, s. 73(2) has, like s. 73(1), no implication for aperson alleged to be a party to the proceedings but who takes no part in thoseproceedings.102 However, if ‘a party to the proceedings’ includes a person who isa party to the arbitration agreement out of which the proceedings arise, or aperson against whom arbitral proceedings are properly commenced, this is aquestion of law. Thus, a person may, in consequence of the tribunal’sjurisdictional ruling, be a party to the proceedings even if they take no part in theproceedings. If so, that person will be subject to the statutory waiver in s. 73(2)since s. 73(2) is not, like s. 73(1), restricted to parties to the proceedings whoparticipate in them.

xii

xii. Allocating the costs of invalid arbitral proceedings

There is conceptual difficulty with an arbitral tribunal having power to allocatecosts in circumstances where that tribunal or a court, on a s. 67 application,concludes that the tribunal does not have substantive jurisdiction. If the tribunalrules that it does not have jurisdiction, then the usual cost award will be that theparty initiating the arbitration, ordinarily the claimant, should bear and pay itsopponent’s costs. It is unlikely that, faced with such an order, the claimant couldsuccessfully argue that the tribunal, having found that it did not have jurisdictionin regard to the substantive dispute, had no jurisdiction to award costs against it.Nevertheless, the conceptual basis for rejecting such an argument is problematic.

100 AA 1996, s. 67(1)(b).101 This was the approach adopted in Svenska Petroleum Exploration AB v. Lithuania [2005] 1 Lloyd’s Rep. 515, where

it was said that the expression ‘a party to arbitral proceedings’ included a person who took part in arbitralproceedings for the purpose of contesting the substantive jurisdiction of the tribunal.

102 Mustill and Boyd favour this interpretation, see supra n. 10 at p. 363.


One possibility is that, by initiating and pursuing the purported arbitration in theface of jurisdictional objections, the claimant is estopped from or has waived itsright to argue that the tribunal was not entitled to act as arbitrator for thepurpose of ruling on the jurisdictional objection under s. 31 and exercising all theancillary powers of the 1996 Act consequent on it doing so, including making anaward of costs. Another possibility is that the claimant cannot seek the benefit ofa ruling on jurisdiction under s. 31 without the burden of the tribunal’s award onancillary matters, in particular costs, associated with that ruling. A further possibility,apparently favoured by the German courts, is that the power to order costs insuch circumstances is an incident of the tribunal’s Kompetenz-Kompetenz.103

These conceptual difficulties are compounded if recognition or enforcement ofthe tribunal’s costs award is sought under the New York Convention, since thatConvention requires there to be a written agreement to arbitrate binding theparties and that agreement, or a duly certified copy, to be provided to theenforcing court.104 It may be the absence of such an agreement that resulted inthe tribunal concluding that it had no jurisdiction. This problem arose inMontague v. Commonwealth Development Corp,105 which concerned the enforcement inQueensland, Australia, of a New Zealand award of costs made against thereferring party by an ICC tribunal which had ruled that it did not havejurisdiction over the parties’ dispute. However, the court was able to avoidresolving it, since both parties had signed terms of reference and the courtconcluded that these, in themselves, were a sufficient written arbitrationagreement for the purpose of Article II of the New York Convention.106

There may also difficulties in allocating costs where the court, on a successfulapplication under s. 67, sets aside the tribunal’s award as to its substantivejurisdiction or declares an award on the merits to be of no effect on the groundthat the tribunal did not have jurisdiction. The court does not have jurisdiction todeal with the costs of the abortive arbitration. Thus, the party who has beensuccessful on the s. 67 application will, if it wishes to recover the costs expendedby it in the arbitration, have to contend that the tribunal retains sufficientjurisdiction to allocate those costs, even though it has been held by the court notto have jurisdiction over the substantive dispute.107

It might be thought, following the reasoning in Montague v. CommonwealthDevelopment Corp.,108 that a solution to these uncertainties would be for the tribunal

103 See S Kröll, ‘Recourse against Negative Decisions on Jurisdiction’ in (2004) 20 Arb. Int’l 155.104 New York Convention, Arts II and IV(1)(b).105 (Australia, Supreme Court of Queensland, 27 June 2000) XXVI YB Comm. Arb. 744. The relevant provision,

s. 3 of the Commercial Arbitration Act, follows Art. II of the New York Convention.106 The court’s conclusion that terms of reference in an ICC arbitration constitute an ad hoc arbitration

agreement is controversial. See S. Greenberg and M. Secomb, ‘Terms of Reference and NegativeJurisdictional Decisions: A Lesson from Australia’ in (2003) 18(1) Arb. Int’l 125.

107 The starting point for such an argument could be the reasoning in Hussman (Europe) Ltd v. Ahmed Pharam[2003] EWCA (Civ) 266 (Lawtel), that the orders made by the court do not, in themselves, affect whatjurisdiction the tribunal has. It could then be argued that the party initiating the invalid arbitration is subjectto the arbitrator’s jurisdiction on costs for one of the reasons discussed in this article.

108 (Australia, Supreme Court of Queensland, 27 June 2000) XXVI YB Comm. Arb. 744.


to obtain, before determining a jurisdictional objection, the parties’ agreement,whether by signed document, similar to the ICC terms of reference, or byexchange of correspondence, to it doing so. The difficulty with this approach isthat such an agreement may be interpreted as an ad hoc agreement to arbitratethe jurisdictional objection as a separate dispute before the tribunal. If so, theparties’ right to question the tribunal’s award under s. 67 would be lost. This isbecause the award would not concern a ruling of the tribunal on its ownjurisdiction in respect of the parties’ substantive dispute under s. 31 of the 1996Act. It would be an award made under a separate arbitration agreement andwould be concerned not with ruling on the validity of that agreement, but withthe tribunal’s jurisdiction in other proceedings.109

xiii

xiii. Obtaining the court’s determination of a preliminary question of jurisdiction

The 1996 Act includes a procedure, which has no equivalent in the Model Law,under which a party to arbitral proceedings may apply to the court to determineany question as to the substantive jurisdiction of the tribunal, provided that theapplication is made either with the agreement in writing of all the other parties tothe proceedings or with the permission of the tribunal, provided, in the lattercase, that the court is satisfied that the determination of the question is likely toproduce substantial savings in costs, the application was made without delay, andthere is good reason why the matter should be decided by the court.110

An agreement in writing can, for this purpose, be made either before or afterthe parties’ dispute arises. It may, for instance, be embodied in the applicablearbitration rules.111 If there is such agreement then, irrespective of whether or notthe tribunal has also given its permission to the application, the court has nochoice but to deal with the merits of the application.112

The situation where a s. 32 application is made with the permission of thetribunal, not by agreement of the parties, was considered in Belgravia Property Ltd v.S&R Ltd.113 The court considered that the tribunal had been right to give itspermission to the application since the question raised, which concerned thecircumstances in which a party under a standard form contract providing forname borrowing arbitration could begin an arbitration in the borrowed name,went directly to the tribunal’s jurisdiction and should be determined at the outsetof the proceedings. Furthermore, the question was not dependent on and would

109 LG Caltex Gas Co. Ltd v. China National Petroleum Corp. [2001] 1 WLR 1892 (CA).110 Under s. 32 of the 1996 Act, the side heading to which reads ‘Determination of Preliminary Point of

Jurisdiction’.111 Taylor Woodrow Civil Engineering Ltd v. Hutchison IDH Development Ltd [1999] ADRLJ 83. The case concerned

AA 1996, s. 69(2), but the reasoning is equally applicable to s. 32(2). If the existence of the arbitrationagreement is disputed, it will not be possible for the applicant to rely on its terms as an agreement for themaking of a s. 32 application. See Athletic Union of Constantinople v. National Basketball Association [2002] 1 Lloyd’sRep. 305 (Deputy Judge Field QC), paras 41, 42.

112 See Gebr. Broere BV v. Saras Chimica SpA [1992] 2 Lloyd’s Rep. 436, considering the similarly worded regime ins. 2(1) and (2) of the 1979 Act (now repealed).

113 [2001] BLR 424.


not be affected by the outcome of any investigation into the substantive claims.Although these are all good reasons for the jurisdictional question to be dealt withpromptly, it is not clear why the court considered that they amounted to goodreasons why it should be dealt with by the court under s. 32, rather than thetribunal under s. 31; nor did the court indicate why it considered that thedetermination of the jurisdictional question, one which was, apparently, decidedwithout oral evidence, by the court rather than the tribunal, was likely to producesubstantial savings in costs. The possibility that, if the tribunal dealt with thematter under s. 31, it might come before the court on a s. 67 challenge, with theextra costs that would involve, cannot be sufficient. A possibility is not the same asa likelihood.114 Furthermore, if such a concern is sufficient to justify the court’sconsideration of a jurisdictional question, it would mean that recourse to thecourt under s. 32 would be the norm not, as envisaged by the DepartmentalAdvisory Committee, an exceptional remedy.115

A further hurdle that has to be overcome before making a s. 32 application isthat the right to do so is subject to the statutory waiver in s. 73(1).116 Thus, apreliminary question of jurisdiction cannot be brought before the court on a s. 32application unless the objection to the tribunal’s substantive jurisdiction, whichthat question concerns, has been duly raised within the time limits provided for ins. 31, the tribunal has admitted the objection out of time, or the party raising theobjection can show that, at the time it took part or continued to take part in thearbitral proceedings without having raised the objection, it did not know andcould not with reasonable diligence have discovered the grounds for thatobjection.117

xiv

xiv. Purpose and effect of a section 32 determination

The purpose of s. 32 and the reasons for its inclusion in the 1996 Act is difficultto fathom.118 The wording is derived from s. 2 of the Arbitration Act 1979 (‘the1979 Act’). This provided, under a side heading ‘Determination of preliminarypoints of law by the court’, that the High Court could, on application of a party,determine any question of law arising in the course of the reference, the right to

114 The equivalent wording in s. 2(2)(a) of the 1979 Act (now repealed) was ‘might produce substantial savingsin costs’. These words were considered in The ‘Vassso’ [1983] 2 Lloyd’s Rep. 356. The court considered that,since what had to be established was that the application might result in a substantial saving in costs, it wassufficient that, if the question was determined one way rather than the other, it would either determine theresult altogether or at least shorten the hearing. The fact that the question might be decided the other wayand not have either of these consequences, did not prevent the court having jurisdiction to consider theapplication. It is doubtful that this reasoning applies to the more onerous ‘is likely to produce substantialsavings in costs’ test in s. 32(2)(b)(i) of the 1996 Act.

115 The body responsible for drafting the 1996 Act. See Departmental Advisory Committee Report (February1996), para. 141.

116 See AA 1996, s. 32(1).117 AA 1996, s. 73(1). The interrelationship between s. 73 and s. 31 is discussed supra.118 The Departmental Advisory Committee said s. 32 was only intended for exceptional cases, but might be

appropriate where a claimant in arbitral proceedings wished to obtain the court’s determination of ajurisdictional objection raised by a respondent who refused to participate in the arbitration: DepartmentalAdvisory Committee Report (February 1996), paras 141, 147.


make such an application being subject to similar restrictions to those now foundin s. 32 of the 1996 Act.119 Section 2 of the 1979 Act was considered by the Courtof Appeal in Babanaft International Co. SA v. Avanti Petroleum Inc.120 Donaldson L.J.,with whom the other members of the court agreed, viewed it as the successor tothe old consultative case. It was a procedure under which ‘put colloquially, the …parties nip down the road to pick the brains of one of Her Majesty’s judges and,thus enlightened, resume the arbitration’. He considered that a decision under s.2, like the court’s determination of a consultative case, was not res judicata. Thus,subject to obtaining leave to appeal, if necessary, a party could appeal asubsequent award of the tribunal on the basis that it had erred in law, eventhough the law the tribunal had applied was that decided by the High Court ona s. 2 application in the same arbitration.121 If the award was not appealed or, atany rate, not successfully, then it was the tribunal’s award, not the decision of thecourt on the s. 2 application, that under the doctrine of res judicata, barred theparties from relitigating or re-arbitrating the issues decided.122

It appears that Parliament was aware that a determination of the court on a s.32 application might not be res judicata and thus not amenable to appeal to theCourt of Appeal since, as was done in s. 2 of the 1979 Act, s. 32(6) provides thatthe decision of the court on a preliminary question of jurisdiction shall be treatedas if it were a judgment of the court for the purpose of any appeal.123

A further curiosity of s. 32, which supports this analysis, is that it does notprovide for the court to do more than determine the preliminary point ofjurisdiction. Unlike s. 72, it does not empower the court to grant any reliefconsequent upon that determination, in particular a declaration or injunction,the usual relief granted by a court when determining the jurisdiction of anarbitral tribunal prior to the 1996 Act. This has not, however, stopped the courtgranting such relief on a s. 32 application.124 Nevertheless, the jurisdiction fordoing so is problematic125 as are the implications of the court’s determination forthe parties, should the same jurisdictional issues arise in subsequent proceedings,

119 The 1979 Act was repealed by the 1996 Act, but a similar provision to s. 2, concerned with questions of law,is now found in s. 45 of the 1996 Act.

120 [1982] 1 WLR 871, per Donaldson LJ at 881–883.121 As happened in British Westinghouse Electric and Manufacturing Co. Ltd v. Underground Electric Railways Co. of London

Ltd [1912] AC 673 (HL), where an award incorporating the decision of the Divisional Court on certainquestions of law answered by it on a consultative case was subsequently set aside for error of law on the face.See discussion in Mustill and Boyd, supra n. 10 at 618.

122 Fidelitas Shipping Co. Ltd v. V/O Exportchleb [1965] 1 Lloyd’s Rep. 223 (CA).123 The source of these words can be traced back to Arbitration Act 1934, s. 9. They were introduced in

response to Re Knight and Tabernacle Permanent Building Society [1892] 2 QB 613 where it was held that, since thecourt’s opinion on a consultative case was not an order of the court, it could not be appealed to the Courtof Appeal.

124 See e.g., Belgravia Property Ltd v. S&R Ltd [2001] BLR 424 (TCC) where the court, having determined thejurisdictional question referred to it under s. 32, indicated that it would grant a declaration that thearbitrator did not yet have jurisdiction in respect of the matters referred to him. The court also granteddeclarations on applications under s. 2 of the 1979 Act (now repealed), but without casting doubt onDonaldson L.J.’s reasoning in Babanaft International Co. SA v. Avanti Petroleum Inc. See e.g., Prudential Assurance Co.Ltd v. 99 Bishopsgate Ltd [1992] 1 EGLR 119, where Babanaft was cited.

125 Welex AG v. Rosa Maritime Ltd [2003] 2 Lloyd’s Rep. 509, para. 30 (CA).


whether in court or in arbitration, particularly where, as will generally be thecase, the court’s decision on the s. 32 application is not subsequently embodied inan award of the tribunal.

Thus, although the Departmental Advisory Committee considered that a s. 32application might be appropriate where a claimant in arbitral proceedings wasconcerned to have an immediate determination by the court of a jurisdictionalobjection raised by a non-participating respondent, s. 32 is, because of itsuncertain meaning and effect, unsuitable for this purpose. Furthermore, if thiswas the principal purpose of s. 32, it is surprising that the requirement to givenotice of the application does not extend to alleged parties, as well as to parties tothe proceedings.126 As has been noted above, it is not clear whether a non-participant who disputes the tribunal’s jurisdiction can be properly regarded as aparty to the arbitration, at any rate until the tribunal has been held to havejurisdiction over it.

d

d. Court’s Inherent Power to Determine Jurisdictional Objections

Prior to the 1996 Act, a tribunal could enquire into its jurisdiction but, unlessgiven the power to do so by agreement of the parties, could not determine its ownsubstantive jurisdiction.127 Subject to questions of waiver and estoppel, a party oralleged party to arbitral proceedings could, at any time, seek a determination ofthe tribunal’s jurisdiction from the court by action for a declaration or injunctionor, unless the right to do so was lost by waiver or estoppel, could rely on thatobjection to resist enforcement of the tribunal’s award.

The procedures in Part I of the 1996 Act for bringing jurisdictional objectionsbefore the tribunal or the court are intended to curtail a party’s common law rightof recourse to the court to determine the tribunal’s jurisdiction. This is reinforcedby s. 1(c) of the 1996 Act which provides that, in matters governed by Part I of theAct, the court should not intervene expect as provided in that Part.128 This is asomewhat weaker restriction on court intervention than article 5 of the Model Law,which provides that in matters governed by the Model Law, no court shall interveneexcept where so provided in that Law. It has lead to arguments that, despite thewording of s. 1(c) of the 1996 Act, the court retains its inherent jurisdiction todetermine, by declaration and injunction, an arbitral tribunal’s jurisdiction at anytime and irrespective of whether the party seeking such relief satisfies theretirements for recourse to the court under ss. 32, 67 or 72 of the 1996 Act.

Such an argument was rejected in ABB Lummus Global Ltd v. Keppel Fils Ltd.129

The court said that the intention of the 1996 Act was to restrict the role of the

126 AA 1996, s. 32(1). cf. s. 72.127 Brown (Christopher) Ltd v. Genossenshaft and others [1954] 1 QB 8.128 See Shorter Oxford English Dictionary: ‘Shall: 20. … In a hypothetical clause relating to the future, should takes

the place of shall … when the supposition, though entertained as possible is viewed as … less welcome thansome alternative’.

129 [1999] 2 Lloyd’s Rep. 24. There was no application under AA 1996, s. 72 because the respondent to thearbitration had participated in the arbitration.


court at an early stage of the arbitration and held that, because of s. 1(c), it hadno jurisdiction to determine the tribunal’s jurisdiction on the application of aparticipant in the arbitration unless the pre-conditions for a s. 32 application weremet. ABB Lummus Global Ltd v. Keppel Fils Ltd was considered but not followed onthis point in Vale de Rio Doce Navegaçao SA v. Shanghai Bao Steel Ocean Shipping Co.Ltd.130 In that case, the court held that the restriction on court intervention in s.1(c) was not, like article 5 of the Model Law, expressed as an absolute prohibition.It did not remove the court’s inherent power to determine jurisdictional questionsconcerning arbitral proceedings, rather, it expressed a general intention that thecourts should not usually intervene except in the circumstances specified in Part Iof the 1996 Act. In this case, which concerned an application by a claimant whohad initiated arbitration to determine a jurisdictional objection raised by a non-participating respondent, the court refused to intervene under this inherentpower since it considered that such circumstances must have been anticipated byParliament. It said that the proper course was for the claimant to procure theappointment of the tribunal and have the jurisdictional objection dealt with by itunder s. 31. The court rejected the argument that, as a matter of generalconvenience, it should deal with the jurisdictional objection immediately ratherthan wait for it to come back to the court on a s. 67 challenge. It observed thatone of the underlying principles of the 1996 Act was that the parties shouldresolve their dispute by the method they had chosen: arbitration.

In JT Mackley & Co. Ltd v. Gossport Marina Ltd,131 counsel conceded that s. 1(c)did not exclude the court’s inherent power to grant declaratory relief in respect ofa question concerning the tribunal’s jurisdiction. Rather, it was submitted that thecourt should be cautious in exercising that power. The court accepted thisproposition, observing that in the ordinary way it should not be troubled withdisputes as to the validity of a reference to arbitration since such questions should,in the first instance, be determined by the tribunal. Nevertheless, the courtconcluded, albeit with some hesitation, that it should determine the applicationfor a declaration, despite the preconditions in s. 32, or for that matter s. 72, notbeing satisfied. It did so because it regarded the question, which concernedwhether, under the Institute of Civil Engineers’ Standard Form Contract, theconditions precedent to a reference to arbitration following an adjudicator’sdecision in the same matter had been satisfied, as of general importance andbecause the answer to that question had implications for validity of the referenceto arbitration.

Thus, in the absence of any higher authority, it appears that, despite thecomprehensive code for dealing with jurisdictional objections provided for in the1996 Act and the policy against court interference embodied in that Act, thecourt retains an inherent jurisdiction to determine jurisdictional questions bydeclaration or injunction, albeit this jurisdiction will only be exercised in

130 [2000] 2 Lloyd’s Rep. 1.131 [2002] BLR 367.


exceptional circumstances.132 The cases do not support the wider proposition thatthe court retains an unfettered jurisdiction to determine, on application,questions concerning the tribunal’s substantive jurisdiction at any time before,during or after arbitral proceedings.133

II

II. JURISDICTIONAL OBJECTIONS TO ARBITRATION BY AN INTENDED CLAIMANT

An intended claimant who disputes its opponent’s contention that the claim issubject to an agreement providing for arbitration in England and Wales will,ordinarily, call the latter’s bluff. This is done by commencing an action in theappropriate court with a view to resisting any application to stay that action orinjunct its prosecution on the grounds that the matters being litigated should bearbitrated.

a

a. Raising Jurisdictional Objections on a Section 9 Application

If a claim, or counterclaim, is brought in the High Court or a county court inEngland and Wales, the defendant to it has a limited period in which to apply tothat court under s. 9 of the 1996 Act for a stay of those proceedings on theground that they concern matters governed by an arbitration agreement.134 Theapplication cannot be made before taking the appropriate procedural step (if any)to acknowledge the proceedings or after the defendant has taken any step in thoseproceedings to answer the substantive claim.135 A step in the proceedings toanswer the substantive claim is one that demonstrates an election to abandon theright to a stay in favour of allowing the action to proceed and has the effect ofinvoking the court’s jurisdiction.136 If the application is made after such a step istaken, the right to seek a stay of the court action is lost.

Court’s approach to jurisdictional objections on a section 9 application

If the application is duly made, and is resisted on the ground that the parties didnot agree to arbitration, the court will, ordinarily, decide that question and, if

132 One such case would be where the parties had agreed that the tribunal would not have s. 30 powers,otherwise there would be no way of obtaining a final determination of the tribunal’s jurisdiction prior to itsaward on the merits, with a resulting risk of wasted costs and time. Somewhat curiously, this appears to bethe position under Indian law, even where the tribunal has ruled on its jurisdiction, see Nirma Ltd v. LurgiEnergie un Entsorgung GmbH (India, High Court, Gujarat, 19 December 2002) XXVIII YB Comm. Arb. 790.

133 See Bernstein’s Handbook of Arbitration and Dispute Resolution Practice (4th edn, 2003), para. 2–333 and Merkin,Arbitration Law, paras 7.20, 7.25. Professor Merkin’s view that if a party withdraws from an arbitration inwhich it has previously participated then, provided it had lodged its jurisdictional objection in accordancewith s. 31(1) or (2), it can seek injunctive or declaratory relief at any stage up to the making of an award, isnot supported by the authority cited, Al Midani v. Al Midani [1999] 1 Lloyd’s Rep. 923 (mis-cited as 2000). AlMidani was decided under the old law.

134 AA 1996, s. 9 gives effect, in England and Wales, to Art. II(3) of the New York Convention.135 AA 1996, s. 9(1), (3). Note also s. 9(2).136 Capital Trust Investments Ltd v. Radio Design AB [2002] 2 All ER 150 (CA).


necessary, will fix an oral hearing of disputed evidence. For, unless satisfied thatthe parties have agreed to arbitration, it has no power to grant a stay under s.9.137 The court has, however, an inherent power to stay its own proceedings andmay be willing to do so, without finally determining whether claims before it aresubject to an arbitration agreement, if it can see that good sense and litigationmanagement make it desirable for an arbitral tribunal to consider the wholematter first, for example, where some matters are indisputably within the arbitraltribunal’s jurisdiction and a consideration of those matters about which there isdoubt will be but a short step to deciding the real issues in dispute between theparties. A stay under the court’s inherent jurisdiction is most likely to be grantedif the court considers that it is virtually certain that the proceedings before it areencompassed by a valid arbitration agreement or the only issue concerns theambit or scope of that agreement. In deciding whether to finally determine,under s. 9 of the 1996 Act, if the parties have agreed to arbitrate the claims, orgrant a stay under its inherent power without doing so, the court will beconcerned about the likelihood of a s. 67 challenge to the tribunal’s subsequentaward leading to two hearings on the same matter, one before the arbitraltribunal and one before the court. It is not in the parties’ interest, or conducive toavoiding unnecessary delay or expense, for the parties to have to return to thecourt to get a definitive answer to a jurisdictional question that could and shouldbe decided by the court before the tribunal embarks on the meat of thereference.138

b

b. Raising Jurisdictional Objections on an Application for an Anti-suit Injunction

Section 9 does not apply where the action is commenced in a court other thanthe High Court or a county court of England and Wales. If the action is broughtin the courts of another country, there may be an equivalent remedy in thatcourt, particularly if the country is a contracting state to the New YorkConvention.139 But, irrespective of whether or not that is the case,140 the

137 Birse Construction Ltd v. St David Ltd [2000] BLR 57 (CA). Unless the parties consent to the question of whetherthey agreed to arbitration being determined on written evidence, the court should, if there is a genuinedispute of relevant fact, give directions for a trial of that question.

138 Al-Nami v. Islamic Press Agency [2000] BLR 150 at 153 (CA). Waller L.J. also considered that the court should,in deciding which course to adopt, have regard to the likelihood of an appeal, for which leave might be givenif needed, from the tribunal’s award on a point of law connected with the existence of the arbitrationagreement, his example being an issue as to its proper law. But it is difficult to see why, in the face of anarbitration agreement, questions of law that do not go to the existence or validity of that agreement wouldever be a matter for a court to decide on an application to stay the proceedings before it.

139 See Art. II of the New York Convention.140 But note the doubt expressed about this by Phillips L.J. in Toepfer International GmbH v. Société Cargill France

[1998] 1 Lloyd’s Rep. 379 at 386 (CA). His concern was that where the overseas action was prosecuted inthe court of a country subject to the New York Convention, it would, as a matter of comity and in theinterests of procedural simplicity, be better if the defendant to the overseas action was left to seek a stay ofthe action in that court.


respondent to the foreign action may, if the alleged agreement provides forarbitration in England and Wales, bring proceedings in the High Court for ananti-suit injunction to restrain the claimant from prosecuting that action on thegrounds that it has been brought in breach of the parties’ arbitration agreement;the court’s jurisdiction to grant such an injunction deriving from s. 37(1) of theSupreme Court Act, not from any provision of the 1996 Act.141 Provided thisremedy is sought promptly, before the overseas action is too far advanced, thecourt will not be unduly diffident in granting an injunction in thesecircumstances. Strong reasons must be shown for not doing so since, without it,the applicant will be deprived of its contractual rights in a situation in whichdamages are manifestly an inadequate remedy.142

Court’s approach to jurisdictional objections on an action for an anti-suit injunction

Prior to the 1996 Act the court would, on an action for an anti-suit injunction insupport of arbitration, finally determine whether or not the parties had agreed toarbitration as a prelude to deciding whether or not to grant an injunction torestrain its breach.143 The position is now less clear. In XL Insurance Ltd v. OwensCorning,144 Toulson J. considered that, for the court to have discretion to grant ananti-suit injunction to restrain a party from prosecuting an action in an overseascourt until the conclusion of an arbitration, it was sufficient for the court to besatisfied that there was an apparent arbitration agreement providing for arbitrationin England and Wales. It was for the arbitral tribunal, or a court on a s. 32application, to finally rule on validity of the arbitration agreement, if thetribunal’s jurisdiction was subsequently challenged on the basis that there was nosuch agreement. It may be that Toulson J. felt able to reach this conclusionbecause he was concerned with granting an interim, not a final injunction. Thus,he did not need to finally determine that the action was being prosecuted inbreach of an arbitration agreement.145

It is not clear how matters would proceed if, following the grant of the interiminjunction, an application was made for the matter to be set down for full trial ofthe claim for a final injunction. One possibility would be for the court to stay itsown proceedings, pending the tribunal’s ruling on whether the parties had agreedto arbitrate, continuing the interim injunction meantime. If the court was notprepared to do this and did proceed to a full trial, it probably remains the casethat, as under the old law, it would have to find that the parties were bound by a

141 Welex AG v. Rosa Maritime Ltd [2003] 2 Lloyd’s Rep. 509, para. 39 (CA).142 Aggeliki Charis Compania Maritima SA v. Pagnan SpA [1995] 1 Lloyd’s Rep. 87 at 96 (CA), per Millett L.J.;

Donohue v. Armco Inc. [2002] 1 Lloyd’s Rep. 425 (HL), in particular, per Lord Bingham, para. 24.143 Aggeliki Charis Compania Maritima SA v. Pagnan SpA [1995] 1 Lloyd’s Rep. 87 (CA).144 [2001] 1 All ER (Comm.) 530.145 It is arguable that since, in reality, the grant of the interim injunction will determine the issue before the

court, a strong case for the existence of a valid arbitration agreement must be shown, not merely an arguablecase. cf. Cambridge Nutrition Ltd v. BBC [1990] 3 All ER 523 (CA).


valid agreement to arbitrate, or the point would have to be conceded, before itwas able to consider its discretion to grant a final injunction.146

III

III. ANCILLARY MATTERS CONCERNING COURT PROCEEDINGS

This part considers three matters relating to proceedings in the courts of Englandand Wales concerning an arbitral tribunal’s jurisdiction: the possibility ofcounterclaims being advanced in those proceedings in respect of the substantiveissues in dispute (the Scrap Trade problem), the court’s jurisdiction where one ormore of the parties is domiciled outside of England and Wales, and theavailability of appeals to the Court of Appeal from the decisions of the court.

a

a. The Scrap Trade Problem

There was, under the old law, a risk that the defendant to a court action for adeclaration or injunction as to validity of an arbitration agreement wouldadvance a counterclaim in those proceedings concerned with the substantivedispute between the parties. If the arbitration agreement was found to be invalid,the counterclaim founded the jurisdiction of the courts of England and Wales todetermine the substantive dispute even if there was no connection between theparties or their transaction and England and Wales, unless the court could bepersuaded not to exercise its jurisdiction, for instance, on grounds of forum nonconveniens. This was because a person who invoked the jurisdiction of the Englishcourt by seeking a declaration or injunction concerned with the validity of analleged arbitration agreement could not claim any special immunity from liabilityto a counterclaim in those proceedings, there being a right under the then Rulesof Court147 to make a counterclaim in that action without the permission of thecourt even if, had the counterclaim been commenced by separate action, it couldnot have been prosecuted because process could not have been served out of thejurisdiction.148

The 1996 Act is silent on this question, but the effect of the procedural rulesnow in force, the Civil Procedure Rules (CPR),149 is that a defendant to courtproceedings for a declaration or injunction concerned with an arbitral tribunal’ssubstantive jurisdiction, whether under s. 72 or the court’s inherent jurisdiction,must now obtain the court’s permission to serve a counterclaim in thoseproceedings. It no longer has a right to do so. If there is no connection betweenthe parties or their transaction and England and Wales, other than the alleged

146 As was done in Welex AG v. Rosa Maritime Ltd [2003] 2 Lloyd’s Rep. 509 (CA) although, in the case, the courtdid so on a cross-application under s. 72 of the 1996 Act (see para. 34). See also the discussion on this point inNavigation Maritime Bulgare v. Rustal Trading [2002] 2 Lloyd’s Rep. 106.

147 See RSC Order 28 Rule 7 and Order 15 rules 2 and 5 (now repealed).148 Metal Shipping Co. Ltd v. Kate Shipping Co. Ltd [1990] 1 Lloyd’s Rep. 297 at 299, 307 (HL) (but note dissent by

Lord Goff at 309).149 CPR Parts 8 and 62. See in particular Rules 8.7, 62.1, 62.3 and 62.8.


agreement providing for arbitration in England and Wales, it is difficult to seethat the court would give its permission merely to enable the defendant to foundjurisdiction and thus force the claimant, if the arbitration clause is invalid, tolitigate the substantive issues in a forum which it would not otherwise havechosen, England and Wales.150

b

b. Serving Process out of the Jurisdiction

The courts of England and Wales exercise an exorbitant jurisdiction over theparties to actions concerning arbitrations whose seat is in England and Waleseven if neither is domiciled in and, apart from the arbitration, has any connectionwith England and Wales. Thus, the court may give permission for service ofprocess claiming relief from the court under any provision of the 1996 Act,including under ss. 18, 32, 66, 67 and 72, out of the jurisdiction.151 This is thecase irrespective of whether the defendant is domiciled in a contracting state to theBrussels or Legano Conventions, both concerned with jurisdiction and the recognitionand enforcement of judgements, or the Council Regulation on Jurisdiction andthe Recognition and Enforcement of Judgments (‘the Judgments Regulation’).152

Proceedings commenced in court under the provisions of the 1996 Act, even ifthey involve consideration of the validity of the arbitration agreement as apreliminary issue, come within the arbitration exception to those treaties.153

This exorbitant jurisdiction is also exercised where the action is for an anti-suitinjunction to restrain the defendant from prosecuting an action elsewhere inbreach of an agreement providing for arbitration in England and Wales. Thus,the court may give permission for service of proceedings claiming such relief outof the jurisdiction on any person alleged to be a party to that agreement.154

150 Lord Goff ’s dissenting judgment in Metal Shipping Co. Ltd v. Kate Shipping Co. Ltd [1990] 1 Lloyd’s Rep. 297(HL) provides strong arguments against giving permission. In Tongyuan (USA) International Trading Group v. Uni-Clan Ltd, 19 January 2001 (Lawtel), one of the grounds on which the defendant sought, unsuccessfully, to setaside the court’s order giving permission for a CITAC award to be enforced in England and Wales was thatthe claimant should be required to commence an action on the award so that the defendant’s cross-claimconcerning damage to the goods which the tribunal had ordered to be returned to it, could be taken intoaccount. It seems to have been assumed that the defendant could not have obtained the court’s permissionunder CPR Rule 8.7 to serve a counterclaim in proceedings commenced under CPR Part 8 for summaryenforcement, but that, in an action on the award, commenced under CPR Part 7, the defendant would havethe right to do so under CPR Rule 20.4.

151 CPR Rule 62.5.152 The Brussels and Legano Conventions on Jurisdiction and the Recognition and Enforcement of Judgments,

now largely superseded by the Council Regulation on Jurisdiction and the Recognition and Enforcement ofJudgments (‘the Judgments Regulation’). The relevant states are those who are members of EFTA or of theEU and states who are in the process of becoming members of the EU.

153 Art. 1(4) in the Conventions, art. 1(2)(d) of the Judgments Regulation; Mark Rich and Co. AG v. Societa ItalinaImpianti [1991] 1 ECR 3855, [1992] 1 Lloyd’s Rep. 342 (judgment only).

154 Under CPR Rule 62.5(1)(c)(i) (note also Rule 6.20(5)(c)); Navigation Maritime Bulgare v. Rustal Trading [2002] 2Lloyd’s Rep. 106 (considering para. 8.1 of the Arbitration Practice Direction, now superseded by thesimilarly worded Rule 62.5). The court has no power to permit service on a person not alleged to be a partyto the agreement, Vale de Rio Doce Navegaçao SA v. Shanghai Bao Steel Ocean Shipping Co. Ltd [2000] 2 Lloyd’s Rep.1. Merkin, Arbitration Law, para. 6.64, citing Sokana Industries Inc. v. Freyre & Co. Inc. [1994] 2 Lloyd’s Rep. 57,suggests that the court has no such power, but Sokana was concerned with the court’s powers to permitservice out of the jurisdiction under the more narrowly worded RSC Order 72 Rule 7(1) (now repealed).


Although the point remains open for determination by the European Court ofJustice (ECJ),155 the courts of England and Wales regard such proceedings as alsofalling within the arbitration exception provided for in the Brussels and LeganoConventions and the Judgments Regulation, since their essential focus or essentialsubject matter is arbitration.156 If the courts of England and Wales are rightabout this, the question of incompatibility between the grant of such aninjunction in respect of proceedings in another Convention or Regulation countryand the Conventions or Judgments Regulation does not arise.157 This is becausethe court in which the anti-suit injunction is sought will have to reach its ownconclusion on whether the parties have agreed to arbitrate and, thus, whether theproceedings before it fall within the arbitration exception. If they do, then thecourt cannot be required to stay the proceedings before it under article 21 of theConventions (article 27 of the Judgements Regulation).

c

c. Appeals from a Decision of the Court to the Court of Appeal

Once an application concerning existing or proposed arbitral proceedings hasbeen determined by the court, whether under a provision of the 1996 Act orunder the court’s inherent jurisdiction, there may be the possibility of an appealfrom that decision to the Court of Appeal, subject to obtaining permission toappeal from the relevant court. Decisions of the court made under ss. 9 and 72 ofthe 1996 Act can be appealed with the permission of either that court or theCourt of Appeal,158 as can decisions made under the court’s inherent jurisdictionor a jurisdiction derived form the Supreme Court Act 1981.159 Decisions of thecourt under ss. 18, 32 and 67 of the 1996 Act can only be appealed with thepermission of the first instance court. The Court of Appeal cannot give itself leave

155 Welex AG v. Rosa Maritime Ltd [2002] 2 Lloyd’s Rep. 701, para. 16 (Steel J.); [2003] 2 Lloyd’s Rep. 509, para.52 (CA). For a review of the issues, see D. Hascher, ‘Recognition and Enforcement of Judgments on theExistence and Validity of an Arbitration Clause under the Brussels Convention’ in (1997) 13(1) Arb. Int’l 33;J-P Beraudo, ‘The Arbitration Exception in the Brussels and Legano Conventions: Jurisdiction, Recognitionand Enforcement of Judgments’ in (2001) 18(1) J Int’l Arb. 13; J van Haersolte-van Hof, ‘The ArbitrationException in the Brussels Convention: Further Comment’ in (2001) 18(1) J Int’l Arb. 27.

156 Navigation Maritime Bulgare v. Rustal Trading [2002] 2 Lloyd’s Rep. 106, rejecting the contrary conclusion inPartenreederei M/S ‘Heidberg’ v. Grovsner Grain and Feed Co. Ltd [1995] 2 Lloyd’s Rep. 287. As noted in Bulgare,support for the view taken by the English courts can be found in the judgments of the ECJ in Van UdenMaritime BV v. Kommanditgesellschaft in Ferma Deco-Line [1998] ECR 7091, paras 31 and 32 and in Mark Rich andCo. AG v. Societa Italina Impianti [1991] 1 ECR 3855.

157 See Art. 21 of the Conventions (art. 27 of the Regulations). The ECJ regards anti-suit injunctions in supportof exclusive jurisdiction clauses as incompatible with the regime in the Brussels and Legano Conventions andthe Judgments Regulation, see Case C-116/02 Erich Gasser GmbH v. MISAT Srl, 9 December 2003, [2004] 1Lloyd’s Rep. 222 (a second seized court must, even if seized under an alleged exclusive jurisdictionagreement, stay the proceedings before it unless and until the first seized court determines that it does nothave jurisdiction; it cannot enquire into the jurisdiction of a first seized court). See also the Advocate-General’s opinion in Case C-159/02 Turner, 20 November 2003 (unreported) (anti-suit injunctions areincompatible with Convention principles), now Turner v. Grovit, ECJ 24 April 2004 (the Convention precludesthe grant or an injunction whereby a court of a Contracting State prohibits a party to proceedings pendingbefore it from commencing or continuing legal proceedings before a court of another Contracting State.

158 Inco Europe Ltd v. First Choice [2000] 1 Lloyd’s Rep. 497 (HL).159 Welex AG v. Rosa Maritime Ltd [2003] 2 Lloyd’s Rep. 509, para. 34 (CA).


to hear an appeal from such a decision, or consider an appeal from the firstinstance court’s refusal to give permission to appeal,160 other than in theexceptional case were there has been misconduct or unfairness in the firstinstance court’s refusal to give permission to appeal, for instance, because it failedto give reasons for that refusal.161

IV

IV. RESISTING RECOGNITION AND ENFORCEMENT OF AN AWARD ON JURISDICTIONAL GROUNDS

The right to resist recognition and enforcement of an award made in arbitralproceedings governed by the 1996 Act on jurisdictional grounds may depend onwhether recognition and enforcement is sought in England and Wales or in someother jurisdiction.

a

a. Recognition in England and Wales

An award made in arbitral proceedings governed by the 1996 Act will, unlessotherwise agreed by the parties or successfully challenged or appealed, berecognised in England and Wales as final and binding on the parties or anypersons claiming though or under them.162 Furthermore, the award creates anissue estoppel per res judicata such that nether party can relitigate or re-arbitrateany issue raised in the arbitral proceedings which was necessary for thedetermination of the whole case, and which was determined by that award.163

b

b. Enforcement in England and Wales

Enforcement of English arbitral awards in England and Wales is governed by s.66 of the 1996 Act.164 This provides that an award made by an arbitral tribunalpursuant to an arbitration agreement may, with the permission of the court, beenforced in the same manner as a judgment or order of the court to the sameeffect. Although the court is obliged not to give permission where, or to the extentthat, the person against whom the award is sought to be enforced shows that thetribunal lacked substantive jurisdiction to make the award, the right to raise suchan objection may be lost by operation of the statutory waiver in ss. 73(1) and73(2).165

i

160 See ss. 18(5), 32(5) and (6), 67(4) and 105(1); Henry Boot Construction v. Malmaison Hotel [2000] 2 All ER(Comm.) 960 (CA); Athletic Union v. NBA [2002] 1 Lloyd’s Rep. 305.

161 North Range Shipping v. Seatrans Shipping [2002] 1 WLR 2397 (CA).162 AA 1996, s. 58, a non-mandatory provision, see s. 4(1).163 Fidelitas Shipping Co. v. V/O Exportchleb [1965] 1 Lloyd’s Rep. 223 (CA); see also Carl-Zeiss Stiftung v. Rayner and

Keeler ltd (No. 2) [1967] 1 AC 853 (HL), principally per Lord Reid at 609–617 and Lord Wilberforce at 963–697. If the tribunal’s determination of the issue is not necessary for its decision, it does not give rise to anissue estoppel, Lincoln National v. Sun Life [2005] 1 Lloyd’s Rep 606.

164 The proceedings can, if necessary, be served out of the jurisdiction, see Part III supra.165 AA 1996, s. 66(1), (3).


i. Implications of the statutory waiver for enforcement of an award against a participant in the arbitration

Where the party against whom enforcement of an award is sought hasparticipated in the arbitral proceedings leading to that award, it cannot resistenforcement by relying on a jurisdictional objection that was not raised in duetime before the tribunal during the course of the arbitration unless the tribunalhas admitted the objection out of time,166 or the party resisting enforcement canestablish that, at the time it took part or continued to take part in the arbitralproceedings, it did not know and could not with reasonable diligence havediscovered the grounds for the objection.167 If the jurisdictional objection hasbeen ruled on and rejected by award of the tribunal, enforcement of that orsubsequent awards of the tribunal cannot be resisted by reference to thatobjection.168 If the objection is to be pursued, this must be done by applicationunder s. 67 or, if available, by agreed process of appeal or review of thataward.

Even in those cases where the statutory waiver does not apply,169 the right toresist enforcement of an award on jurisdictional grounds may be lost at commonlaw, if, as will generally be the case, those grounds could have been relied on toquestion the award under s. 67.170

ii

ii. Implications of the statutory waiver for enforcement against a non-participant in the arbitration

Where the party against whom enforcement of an award is sought has taken nopart in the arbitral proceedings leading to that award, it is not precluded fromraising jurisdictional objections to enforcement merely because these were notraised in due time during the course of the arbitral proceedings.171 It is not clearwhether a non-participant, who was aware of the proceedings and of an awardbeing made in which the tribunal ruled that it had jurisdiction, but did notquestion that award by application under s. 67, will be barred, under s. 73(2) or atcommon law, from resisting enforcement of that award, or other awards of thetribunal, on any ground that was the subject of the tribunal’s ruling.172

c

166 Under ibid. s. 31(3).167 ibid. s. 73(1).168 ibid. s. 73(2); People’s Insurance Company of China v. Vysanthi Shipping Corporation [2003] 2 Lloyd’s Rep. 617.169 The lacunae in the statutory waiver are discussed in Part I supra.170 By extension of the reasoning in Scrimaglio v. Thornett & Fehr [1924] 18 LlL Rep 148 (CA) and Termarea SRL

v. Rederiaktibolaget Sally [1979] 2 Lloyd’s Rep. 439.171 AA 1996, s. 73(1) only applies to those who participate in the proceedings.172 ibid. s. 73(2). This part of the statutory waiver is not expressly limited to those who participate. Its uncertain

implications for those who do not participate in the arbitration are considered in Part I of this article. It isnot clear whether the principles in cases such as Scrimaglio v. Thornett & Fehr [1924] 18 LlL Rep. 148 (CA),Termarea SRL v. Rederiaktibolaget Sally [1979] 2 Lloyd’s Rep. 439 apply to non-participants.


c. Enforcement and Recognition in the Courts of Another Country

Where enforcement or recognition of an award in proceedings governed by the1996 Act is sought outside England and Wales, it will be a matter for the law ofthe enforcing state whether recognition and enforcement can be resisted on thebasis of jurisdictional objections that have been rejected by award of the tribunalor by the courts of England and Wales, or which would be regarded as waivedunder the law of England and Wales. Since, in most cases, the enforcing state willbe a contracting state to the New York Convention, this will depend, principally,on the way in which that law interprets the Convention; in particular, Articles IVand V.

Under Article IV(1)(b) of the Convention, it is for the party seeking recognitionand enforcement of an award, to provide at the time of its application forenforcement, along with the award, the original or a certified copy of the‘agreement referred to in article II’, Article II being concerned with agreementsin writing, including an arbitral clause in a contract or an arbitration agreement,signed by the parties or contained in an exchange of letters or telegrams, thatprovides for arbitration of present or future differences in respect of a definedlegal relationship, whether contractual or not, concerning a subject mattercapable of settlement by arbitration.173 Provided that these thresholdrequirements are satisfied, it is for the party resisting recognition and enforcementto prove one of the grounds for doing so under Article V of the Convention, thegrounds in Articles V(1)(a), (c) and (d) equating to objections to the tribunal’ssubstantive jurisdiction, as defined in s. 30(1) of the 1996 Act.174

One view is that, since the New York Convention does not expressly deal withthe matter, an arbitral tribunal’s decision on its jurisdiction can be of no weighton recognition and enforcement proceedings under the Convention, nor does aparty’s failure to challenge the tribunal’s decision on its jurisdiction in the courtsat the seat of the arbitration bar it from contesting the tribunal’s jurisdiction onenforcement proceedings.175 But a review of cases reported in the Year Books ofCommercial Arbitration shows that, in certain circumstances, enforcing courts havegiven weight to a tribunal’s award on its jurisdiction or to party’s failure tochallenge that decision in the courts at the seat of the arbitration. As forjudgments of a court at the seat of the arbitration concerning the tribunal’sjurisdiction, the status of such judgments on enforcement proceedings in another

173 Art. II(1) and (2).174 Art. V(1)(a): ‘the arbitration agreement is not valid under the law to which the parties have subjected it or,

failing any indication thereof, under the law of the country where the award was made’; cf. AA 1996, s.30(1)(a). Article V(1)(c): ‘where the award deals with a difference not contemplated by or not falling with theterms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submissionto arbitration’; compare AA 1996, s. 30(1)(c). Article V(1)(d): ‘where the composition of the arbitral authoritywas not in accordance with the agreement of the parties or, failing such agreement was not in accordancewith the law of the country were the arbitration took place’; cf. AA 1996, s. 30(1)(b).

175 Van den Berg, The New York Convention of 1958 (1981), p. 286.


jurisdiction depends on the enforcing court’s attitude to foreign judgments, not onthe wording of the New York Convention.176

i

i. Threshold criteria for enforcement 177

The enforcing court’s interpretation of the threshold criteria for enforcement inArticle IV(1) (b) of the Convention has a direct bearing on whether it will beprepared to give weight to decisions of the tribunal or of the courts of Englandand Wales that the parties had agreed to arbitration.

In many jurisdictions, the requirement to provide the original or a copy of the‘agreement referred to in article II’ is regarded as requiring the party seekingenforcement to prove the formal validity of the arbitration agreement on which itrelies.178 But, since neither Article II, nor Article IV of the Convention identifiesan applicable law, there is uncertainty over which law should apply in decidingthis question,179 the possibilities being the law of the enforcing state, the law ofthe arbitration agreement or, in the absence of any indication of the law of thearbitration agreement, the law of the country where the award was made?180

If the law of the enforcing state is applied, decisions upholding the arbitrationagreement made by the tribunal or by the courts at the seat of the arbitration areof no weight since these will have applied the law of the arbitration agreement orof the seat of the arbitration. Thus, in Peter Cremer GmbH & Co. v. Co-operativeMolasses Traders Ltd,181 which concerned the enforcement of an English award inthe Republic of Ireland, the Supreme Court of Ireland held that, if disputed, thecourt had to be satisfied that there was a binding arbitration agreement betweenthe parties before entering on the application to enforce the award. It was notbarred from considering this question by the tribunal’s decision that a contracthad been concluded. A similar view appears to have been taken by the SwissFederal Supreme Court in A Ltd v. BAG,182 where one of its grounds for refusingan application to enforce a London arbitral award in Switzerland was that thedocuments provided by the applicant did not satisfy the formal requirements of

176 C. Kessedjian, ‘Court Decisions on Enforcement of Arbitration Agreements and Awards’ in (2001) 18(1) JInt’l Arb. 1.

177 These principles also apply where recognition is sought.178 Van den Berg, supra n. 167 at pp. 286, 312.179 See (although more concerned with Art. II(1) and (3), than with Arts II(2) and IV(1)), J. Paulsson,

‘Arbitrability: Still Through a Glass Darkly’ in ICC Bulletin, Special Supplement (1999), p. 95; H. Arfazadeh,‘Arbitrability under the New York Convention: the Lex Fori Revisited’ in (2001) 17(1) Arb. Int’l 73.

180 This question is far from academic as legal systems differ over the interpretation of the requirement forwriting. Some regard the Art. II(2) definition as exhaustive. Others, as is allowed for in Art. VII(1), take amore relaxed view, accepting that an arbitration agreement is in writing if there is some written evidence ofthat agreement, even though it is not contained in a document signed by the parties or in an exchange ofcorrespondence between them. See Redfern and Hunter, Law and Practice of International Commercial Arbitration(4th edn, 2004), pp. 134–137; G. Alvarez, ‘Article II(2) of the New York Convention and the Courts’ in ICCACongress Series No. 9 (Kluwer, 2000), p. 67. The more relaxed view accords with the view of the Secretariat ofthe United Nations: Possible Future Work in the Area of International Commercial Arbitration (6 April 1999), Part B(available at www.uncitral.org).

181 [1985] ILRM 564 (Ireland, Supreme Court).182 Switzerland, Bundesgericht, 31 May 2002, XXVIII YB Comm. Arb. 835.


Article II(2). These documents were, principally, an unsigned charterparty, whichreferred to the applicant’s general conditions of contract, the general conditionsthemselves, which contained an arbitration clause, and correspondenceconcerning the charterparty which did not mention the general conditions or thearbitration clause. In reaching its conclusion, the court appears to have appliedSwiss law since it did not consider whether the reference in the charterparty tothe general conditions would have been sufficient, under the law of England andWales, to incorporate the arbitration clause in those conditions.183 It is not clearwhether the tribunal had ruled on its own jurisdiction, but there is nothing in thereported extracts to suggest that the Swiss court regarded this as relevant to thequestion it had to decide.

It is possible, however, to distinguish between what documents must beprovided for the purpose of Article IV(1)(b), something ordinarily determined bythe law of the enforcing state,184 which may take a liberal or a restricted view ofthe necessary formalities,185 and establishing that the parties had agreed to theevidenced terms, something to be decided under the law applicable to the allegedagreement186 and, in respect of which, decisions of the tribunal or the courts atthe seat may be of weight.

In Planavergne SA v. Kalle Bergander,187 which concerned enforcement of a Frenchaward in Sweden, the Swedish Court of Appeal held that, under s. 58 of theSwedish Arbitration Act 1999 (the equivalent of Article II of the Convention) itwas for Planavergne, the party seeking enforcement, to show that the arbitrationagreement on which it relied had been entered into in accordance with the lawapplicable to that agreement, in this case French law. The court considered thatPlanavergne had established this because, according to the findings of the arbitraltribunal, it must be assumed to have established that an agreement to arbitrateexisted between the parties. A similar distinction seems to have informed thereasoning of the Spanish Supreme Court in Actival Internacionale SA v. Conservas ElPilar SA,188 when it refused to enforce an award rendered in France on thegrounds that the arbitration agreement was invalid, despite a ruling by the Courtof Appeal in Paris that the agreement as valid under French law. One of the

183 This possibility could not have been ignored had the issue of validity been dealt with under Art. V(1)(a), notunder Art. II.

184 Consider X v. Y (Germany, Court of Appeal of Bavaria, 17 September 1998) XXVIa YB Comm. Arb. 645,which concerned the enforcement of an English award in Germany. The court rejected an argument thatthe arbitration was not in writing on the basis that it was valid under English law, in particular s. 5(2) of the1996 Act, the law on which the parties had agreed. In reaching this conclusion, the court appears to haveregarded questions as to the required form of an arbitration agreement as matters to be considered underArt. V(1)(a), not Arts IV or II of the Convention.

185 This possibility is allowed for in Art. VII(1) of the New York Convention.186 This result can be achieved either directly, by concluding that the relevant law must, for consistency, be that

referred to in Art. V(1)(a) or indirectly, by application of the enforcing states’ conflict of law rules.187 Sweden: Svea Court of Appeal, 7 September 2001, XXVII YB Comm. Arb. 554, considering Swedish

Arbitration Act 1999, ss. 48, 54, and 58, which, unlike Art. II of the New York Convention, deal separatelywith questions of agreement, capacity and validity and with the laws applicable to each of these threequestions.

188 Spain, Tribunal Supremo, 16 April 1996, XXVII YB Comm. Arb. 528.


court’s reasons for this conclusion was that Actival, the party seekingenforcement, had not supplied evidence of the foreign (French) law governing thevalidity of the arbitration agreement, suggesting that the court considered thatthis was the relevant law for deciding whether the threshold requirements inArticle IV(1) had been satisfied. If the court had been concerned with validityunder Article V(1)(a), the onus of proof would have been on the party resistingenforcement. As for the decision of the Paris court, the enforcing court did notdisregard this because it was considered irrelevant, but because the Paris court’sdecision had not been recognised in the Spanish legal system and no request hadbeen made for its enforcement in Spain.

A distinction between satisfying the formal requirements of Article IV(1)(b) byproviding a copy of the purported arbitration agreement and, if disputed,establishing that the parties actually agreed to the evidenced terms, a matter to bedetermined under the law of contract, not by reference to Article II(2), was alsomade by the US Court of Appeal (Third Circuit) in China Minmetals v. Chi MeiCorp.,189 a case concerning the enforcement of a Chinese award in New Jersey.However, the court held that, where enforcement was resisted on the grounds thatthe alleged arbitration agreement had never been made, was void ab initio,190 theallegation in this case being that the documents provided were forged, theenforcing court should, unless the parties had agreed to the tribunal decidingarbitrability, or the objecting party had waived its objection, make anindependent determination, applying the law of the state, in the United States,where the party was domiciled, of whether the parties had agreed to arbitrate. Itwas not bound by the tribunal’s decision on that question, even if, as was the casehere, the tribunal had, under the applicable CIETAC rules, power to rule on itsown jurisdiction, since the issue was whether the parties had ever agreed to thearbitration clause incorporating those rules. The court found support for thisconclusion in what it found to be the generally accepted view that the doctrine ofKompetenz-Kompetenz restricted but did not exclude the court’s power to reviewthe tribunal’s jurisdiction.

189 China Minmetals Materials Import and Export Co. Ltd v. Chi Mei Corp. (2003) 334 F 3d 274; applying the reasoningin First Options of Chicago Inc. v. Kaplan 514 US 938 (US Supreme Court). The majority view appeared to bethat this was a principle of US public policy to which the court could give effect under of Art. V(2). Alito C.J.dissented on this saying that the party seeking enforcement had not merely to provide, under Art. IV(1)(b),a document purporting to be an arbitration agreement, but to prove that the document was, in fact, anagreement in writing within the meaning of Art. II(2). I am grateful to Ms June McLaughlin-Cheng fordrawing this case to my attention. Now also reported at XXIX YB Comm. Arb. 1003. The US Court ofAppeals, 11th Circuit applied similar reasoning in Czarina LLC v. WF Poe Syndicate, 4 February 2004, XXIX YBComm. Arb. 1200, but, like Alito C.J., regarded Art. IV(1)(b) as embodying a requirement to prove that theexhibited terms had been agreed. The advantage, for the enforcing court, of using either Art. IV or Art. V(2)as the basis for this review is that it avoids the presumption in favour of enforcement in Art. V and therequirement to apply, under Art. V(1)(a), the law to which the alleged agreement was subject, or failing anyindication of what that was, the law of the country were the award was made.

190 It may be that had the issue been subsequent invalidity, that the arbitration agreement was voidable, notvoid, a US court would have considered this to be a matter for the tribunal to decide, Prima Paint Corp. v.Flood & Conklin Mfg. Co. 388 US 395 (US Supreme Court); cited in China Minmetals Materials Import and ExportCo. Ltd v. Chi Mei Corp. (2003) 334 F 3d 274. If this is right it suggests that the determination of the tribunalhas weight on an Article V(1)(a) challenge.


While similar principles are applied in other jurisdictions,191 the reasoning ofthe court appears to have overlooked that, under most developed systems ofarbitral law, such a review is, under the curial law of the arbitration (the lex arbitri),primarily a matter for the courts at the seat of the arbitration with recoursehaving to be sought within a limited period of the tribunal’s determination, if it isnot to become final.192 Thus, the question, which lies at the heart of the court’sreasoning, did Chi Mei agree to arbitrate arbitrability (arbitrabilityencompassing, in American law, the existence and validity of an arbitrationagreement),193 should not be looked at in a procedural vacuum but, at any ratewhere the objecting party has participated in the arbitration, even if only tocontest jurisdiction, in the context of the lex arbitri. Looked at in this widercontext, the question becomes not whether a party has waived its jurisdictionalobjection, but whether a party who has unsuccessfully contested jurisdictionbefore the arbitral tribunal should be allowed to ignore, on enforcementproceedings in another jurisdiction, provisions of the lex arbitri that impose timelimits on disputing the tribunal’s decision on its jurisdiction in a court ofcompetent jurisdiction at the seat and whether, if a court of competentjurisdiction at the seat has determined the objection, its determination of thatquestion can, itself, be recognised in the enforcing state or, otherwise, gives rise toan issue estoppel binding the parties?194

In those jurisdictions where the threshold conditions to enforcement in ArticleIV(1)(b) of the Convention are satisfied by providing documents that show anapparent agreement to arbitrate, validity, including the existence of the apparentagreement, is usually regarded as a matter to be dealt with under Article V(1)(a),

191 See, for example, Germany. In X (UK) v. Y (Germany), Oberlandesgericht (Court of Appeal), 22 November2001, XXIX YB Comm. Arb. 732, concerning enforcement of an English Award, the Rostock Court of Appeal,having concluded, contrary to the tribunal’s award on the point, that the parties had not agreed toarbitration, said, referring to Art. V(2), that it was contrary to German public policy to enforce an awardmade in the absence of an arbitration agreement. It said, further, that the objecting party’s failure to disputethe tribunal’s award on jurisdiction at the seat, did not rule out there being such a violation of Germanpublic policy. But, in Manufacture (Slovina) v. Exclusive distributor (Germany), Oberlandesgericht (Court ofAppeal), 24 June 1999, XXIX YB Comm. Arb. 687 concerning enforcement of an ICC award made in Paris,the Court of Appeal of Schleswig held that, by identifying the jurisdictional dispute in the tribunal’s terms ofreference, the parties had agreed that the tribunal would decide whether the parties had agreed to arbitrate,thus, the point could not be taken on proceedings for recognition and enforcement.

192 See e.g., the 30-day time limit for questioning a tribunal’s ruling on its jurisdiction under art. 16(3) of theModal Law and the three-month period for applying to set aside an award on the merits on, inter alia,jurisdictional grounds under art. 34, see art. 34(3).

193 The question posed in First Options of Chicago Inc. v. Kaplan 514 US 938 (US Supreme Court) to decidewhether the courts or the arbitral tribunal has primary power to decide whether the parties agreed toarbitrate.

194 See W. Park, ‘The Arbitrability Dicta in First Options v. Kaplan’ in (1996) 12 Arb. Int’l 137 at 147. Park considersthat it is ‘voodoo jurisprudence’ to suggest that an arbitral tribunal can finally determine its own jurisdictionin respect of the identity of the parties or the existence of an arbitration agreement. But, in saying this, hedoes not consider the importance of the curial law in giving finality to the tribunal’s decision. But note theview in X (UK) v. Y (Germany), Germany, Oberlandesgericht (Court of Appeal), 22nd November 2001, XXIXYB Comm. Arb. 732, that the curial law should be ignored, in this respect, on grounds of German publicpolicy. It seems, however, that other challenges, such as concerning the impartiality of the tribunal, cannotbe pursued if not taken before the courts at the seat; Shipowner (Netherlands) v. Cattle and Meat Dealer (Germany),Germany, Bundesgerichtshif (Federal Supreme Court), 1 February 2001, XXIX YB Comm. Arb 700.


the relevant law being the law of the alleged agreement or, if not indicated, of theplace where the award was made. In such jurisdictions, the enforcing court may,when considering whether the documents provided do show a prima facieagreement to arbitrate, be influenced by decisions concerning the existence ofthat agreement by the tribunal or the courts at the seat of arbitration, since theywill be decisions under the applicable law. Thus, in Dardana Ltd v. Yukos Oil Co.,195

which concerned the enforcement of a Swedish award in England and Wales, theCourt of Appeal held that all that the applicant had to provide was apparentlyvalid documentation containing an arbitration clause by reference to whichthe arbitrators had accepted that the parties had agreed to arbitration;documentation that the arbitrators had accepted recorded an agreement toarbitrate made with the parities’ authority. There was no additional requirementto provide evidence that these documents embodied an agreement between theparties. Challenges to the existence or validity of the arbitration agreement had tobe pursued simply and solely under AA 1996, s. 103(2)(b) (equivalent to that partof Article V(1)(a) of the New York Convention concerned with the validity of thealleged agreement). This principle was applied in Svenska Petroleum Exploration AB v.Government of Lithuania, which concerned the recognition of an award onjurisdiction in England and Wales. The court held, further, that a party could not,in proceedings for recognition and enforcement, challenge the validity of anaward on jurisdictional grounds if, having lost that argument before the tribunal,it failed to avail itself of a right to challenge the award in the courts at the seat. Asimilar approach was taken by a New York District Court in Sarhank Group v. OracleCorp.,196 which concerned the enforcement of an Egyptian award in New YorkState. The court held that since it was not being asked to compel arbitrationunder Article II of the Convention, but, rather, enforce a Convention award, itsjurisdiction to consider the application was not dependent on it first deciding thatthe parties had concluded a written agreement to arbitrate within the meaningof Article II of the Convention. The court had jurisdiction to consider theapplication because it had been established by the arbitral tribunal and affirmedby an Egyptian court that, under the laws of Egypt, the party resistingenforcement had concluded an arbitration agreement by agency, a finding thatwas concerned with the construction of the parties’ agreement.197 This decisionwas, however, overturned on appeal,198 the principles in First Options of Chicago Inc.

195 [2002] 2 Lloyd’s Rep. 327 (CA).196 USA, District Court, Southern District of New York, 9 October 2002, XXVIII YB Comm. Arb. 1043.197 It is not clear to what extent this decision can stand with China Minmetals Materials Import and Export Co. Ltd v.

Chi Mei Corp. 334 F.Ed 274 (USA, Court of Appeals for the Third Circuit). It may be that differentconsiderations apply were the initial existence of an arbitral agreement is in dispute, rather than its scope.

198 Sarhank Group v. Oracle Corporation 404 F. 3d 657 (US Court of Appeals, 2nd Cir.), 14 April 2005. The courtsaid that the it was Fedral law of contract and agency, not Egyptian law that was to be applied in decidingwhether an American non-signatory was bound to arbitrate. Presumably, if the party against whomenforcement and recognition was sought, was not domiciled in the USA, it would be the law of its place ofdomicile that applied? See also JM Hosking, ‘Non-Signatories and International Arbitration in the UnitedState, the Quest for Consent’ in 20 Arb Int’l 28, published before the Court of Appeals decision in Sarhank.


v. Kaplan199 being applied as a matter of public policy to which the enforcing courtcould give effect under Article V(2) of the New York Convention.

These alternative approaches to the interpretation of Article IV(1) and itsrelationship with Article II were considered by the Italian Supreme Court in DeMaio Giuseppe v. Interskins Ltd,200 which concerned the enforcement of an Englishaward in Italy. However, the court did not have to chose between them since itconcluded that, irrespective of whether compliance with Article II was a relevantconsideration on enforcement proceedings or whether all questions as to validity,including the non-existence and form of the alleged arbitration agreement, fell tobe considered only under Article V(1)(a), the question of whether the parties’arbitration agreement had been terminated by a later contract between them wasa matter for the arbitrators since it did not concern an initial defect in thearbitration agreement. Thus, the arbitral tribunal’s decision on that questioncould not be re-opened to resist enforcement of the tribunal’s award.

ii

ii. Jurisdictional grounds for resisting recognition and enforcement under Article V of the New York Convention

Provided that the Article IV threshold requirements are satisfied, the enforcingcourt may only refuse to recognise and enforce an award if the party againstwhom enforcement is sought establishes one of the grounds for resistingenforcement in Article V of the Convention.

iii

iii. Enforcing court’s attitude to the tribunal’s determination of its substantive jurisdiction

It is clear from the cases concerned with the threshold criteria to enforcement,discussed previously, that there are a number of jurisdictions in which anenforcing court will give weight to the tribunal’s determination of its substantivejurisdiction where a jurisdictional objection is raised under Article V of theConvention because the enforcing court is, under Article V, concerned with thevalidity of that objection under the same law as the tribunal has applied to decidethat question.201 Thus, although in Planavergne SA v. Kalle Bergander,202 the SwedishCourt of Appeal’s conclusion that the enforcing party must, according to thefindings of the arbitral award, be assumed to have established that an arbitrationagreement existed between the parties under French law concerned the Swedishequivalent of Article II, its reasoning would appear to be equally applicable hadthe validity of the arbitration agreement been questioned under s. 54 of the

199 514 US 938 (US Supreme Court).200 Italy, Corte di Cassazione, 21 January 2000, XXVII YB Comm. Arb. 492.201 Art. V(1)(a), concerned with the validity of the arbitration agreement, provides that this is to be determined

in accordance with the law of that agreement or, in the absence of any indication of that law, under the lawof the country were the award was made. Art. V(1)(c), concerned with what matters have been submitted toarbitration, does not identify an applicable law, but the only relevant laws are the law of the arbitrationagreement or the law of the place of the award; see Van den Berg, supra n. 167 at pp. 312–313. Art. V(1)(d),concerned with the composition of the tribunal, refers to the law of the place of the award.

202 Sweden, Svea Court of Appeal, 7 September 2001, XXVII YB Comm. Arb. 554.


Swedish Act 1999, equivalent to Article V of the Convention. In Sarhank Group v.Oracle Corp.,203 the New York District Court, having concluded that the validity ofthe arbitration agreement could only be challenged under Article V(1)(a) of theConvention, held that the arbitral tribunal’s conclusion that, under Egyptian law,it was in partnership with a signatory to the arbitration agreement and thusbound by that agreement, could not be reviewed by the enforcing court in theabsence of extraordinary circumstances, there being no such circumstances in thiscase.

The possibility that weight will be given to an arbitral tribunal’s determinationof its own jurisdiction has also been recognised in other jurisdictions, albeit not inthe context of an Article V(1) challenge to enforcement. Thus, the SupremeCourt of Switzerland in Compañía Minera_Condesa SA v. RGM-Pérou SAS,204 in thecontext of an application to annul a Swiss award on the grounds that the tribunalshould have stayed the proceedings before it under the rule of litispendence, sincethe dispute was already pending before the Peruvian courts, observed that adecision that a tribunal lacked jurisdiction could be recognised if made by thetribunal itself or, in the context of a review, by a state court. In Merck & Co. Inc. v.Tecnoquímicas SA,205 the Supreme Court of Columbia, while it refused to ‘enforce’an ICC award on jurisdiction on the ground that it was not an award within themeaning of the New York Convention, since it did not finally decide a disputeconcerning the subject matter of the action, accepted that the ‘award’ was a finaldecision on the jurisdictional question. As such, it may be that the court, whilenot prepared to ‘enforce’ that award, would not, ordinarily, allow thejurisdictional question it decided to be reopened in proceedings to enforce thetribunal’s subsequent award on the merits.206

iv

iv. Implications for the enforcing court of a determination of the tribunal’s substantive jurisdiction made by a court at the seat of arbitration

The enforcing court’s attitude to decisions by a court at the seat of the arbitrationconcerning the tribunal’s substantive jurisdiction raises issues that fall outside ofthe ambit of the New York Convention, including consideration of treatiesentered into by the enforcing state concerned with the recognition andenforcement of foreign judgments and whether such treaties exclude courtdecisions on arbitration matters from their ambit.207

If, aside from such treaty obligations,208 the law of the enforcing state isgenerous towards the judgments of foreign courts, the enforcing court may be

203 USA, District Court, Southern District of NY, 9 October 2002, XXVIII YB Comm. Arb. 1043.204 Switzerland, Bundesgerichtshof, 19 December 1997, XXIVa YB Comm. Arb. 727.205 Columbia, Corte Suprema de Justicia, 26 January and 1 March 1999, XXVI YB Comm. Arb. 755. Contrast

Svenska Petroleum Exploration AB v. Lithuania [2005] 1 Lloyd’s Rep. 515, where such an award was recognisedalthough, having been recognised was held, because not final at the seat, not to create an estoppel.

206 See XXVI YB Comm. Arb. 755 at pp. 757 and 762.207 See e.g., Brussels and Legano Conventions and the Judgments Regulation, considered in Part III supra.208 Because of the arbitration exception neither the Brussels or Legano Conventions nor the Judgments

Regulation are likely to apply.


prepared to recognise final and binding decisions concerning an arbitraltribunal’s jurisdiction made by a foreign court of competent jurisdiction; the likelycourts of competent jurisdiction being those at the seat of the arbitration. Thus,as noted above, in Compañía Minera Condesa SA v. RGM-Pérou SAS,209 the SupremeCourt of Switzerland considered that a decision of a foreign court that an arbitraltribunal lacked jurisdiction, made in the course of a review of the tribunal’sdecision on that question, could be recognised under Swiss law. The reference tothe reviewing function of the court indicates that the court in question is that atthe seat of the arbitration, since it is that court which has supervisory jurisdictionover the arbitral proceedings. But if, as in the case under consideration, theforeign court had decided that the parties were not bound to arbitrate theirdispute as a prelude to accepting jurisdiction over that dispute, the Swiss courtwould not recognise that decision without enquiring into its merits. This isbecause the Swiss court, in deciding whether the foreign court was a court ofcompetent jurisdiction, had to form its own view on whether or not the partieswere bound to arbitrate their dispute. If they were, then the foreign court had nojurisdiction in the matter and its decision would not be recognised inSwitzerland.210

Where the enforcing state requires specific procedures to be followed to obtainrecognition and enforcement of a foreign court’s determination of thejurisdictional issue, it will be necessary to comply with these procedures beforeseeking to rely on that determination on enforcement proceedings. Thus, inActival Internacionale SA v. Conservas El Pilar SA,211 the Spanish Supreme Court gaveno weight to a decision of the Paris Court of Appeal upholding the validity of thearbitration agreement because that decision had not been recognised in theSpanish legal system and its enforcement had not been requested in Spain.

v

v. Implications for the parties of a determination concerning the tribunal’s jurisdiction made by a court at the seat of arbitration

If the law of the enforcing state is rooted in English common law, there are tworelated principles under which the enforcing court may regard decisions of acourt at the seat of the arbitration concerning the tribunal’s jurisdiction as

209 Switzerland, Bundesgerichtshof, 19 December 1997, XXIVa YB Comm. Arb. 727, considering art. 25(a) of theSwiss Private International Law Act (PILA).

210 Compañía Minera Condesa SA v. RGM-Pérou SAS (Switzerland, Bundesgerichtshof, 19 December 1997) XXIVaYB Comm. Arb. 727. The courts of England and Wales apply a similar approach; see Tracomin SA v. Sudan OilSeeds Ltd (No. 1) [1983] 1 WLR 662; affirmed [1983] 1 WLR 1036 (CA). It is not clear whether such anargument would be effective to resist enforcement of a judgment under the Brussels or Legano Conventionsor the Judgments Regulation, see Beraudo, supra n. 147; van Haersolte-van Hof, supra n. 147. But note PhillipAlexander v. Banhergen [1997] 1 Lloyd’s Rep. 79 at 115 (CA). In that case the English Court of Appeal refusedto recognise and enforce a foreign judgement under Art. 28(3) of the Brussels Convention obtained indisobedience of an English anti-suit injunction restraining the prosecution of those proceedings on thegrounds that the parties had agreed to arbitration, the ground of public policy issue which enabled the courtto refuse recognition and enforcement being that the judgment was obtained in breach of the arbitrationagreement and in contravention of an anti-suit injunction.

211 Spain, Tribunal Supremo, 16 April 1996, XXVII YB Comm. Arb. 538.


binding on the parties, even if the enforcing court will not, in the absence of atreaty obligation to do so, recognise or enforce foreign judgments or regard themas binding on itself.

The first of these concerns that aspect of the doctrine of res judicata underwhich a final and conclusive judgment on the merits by a foreign court ofcompetent jurisdiction may give rise to an issue estoppel binding on the partiesand their privies in other proceedings between them, provided that it would do sounder the law of the country were the judgment was given.212

The principle was accepted by the High Court of Hong Kong in Karaha BoasCo. v. Perusahaan Pertambangan and others,213 a case that concerned the enforcementin Hong Kong of a Swiss award that had been set aside by a court in Jakarta,Indonesia, on jurisdictional and other grounds. However, the Hong Kong court,having found that the lex arbitri was Swiss, held that the decision of the Jakartacourt did not bind the parties since the Jakarta court was not a court ofcompetent jurisdiction.214 The possibility of the decision of a foreign court,concerning an arbitral tribunal’s jurisdiction, being binding on the parties,although not on the court, was also recognised, in CTA International Pty Ltd v.Sichuan Changhong Electric Co. Ltd.215 This case concerned an application to restrainproceedings before a Melbourne court, inter alia, under s. 7(2) of the InternationalArbitration Act 1974 (equivalent to Article II(3) of the Convention), which wasresisted on the ground that the parties had not concluded a valid arbitrationagreement. This ground had previously been relied on to challenge parallelarbitral proceedings in China in the Mianyang City Intermediate People’s Court,but had been rejected, that court finding that the arbitration agreement wasvalid. The Supreme Court of Melbourne, having said that it, as a Court, was notbound by that decision, held that the parties were bound by the finding of theMianyang court that the arbitration agreement was valid under Chinese law. It is

212 The Sennar (No. 2) [1985] 1 WLR 490 (HL). See also Desert Sun Loan Corporation v. Hill [1996] 2 All ER 847.213 Hong Kong, High Court, 27 March 2003, XXVIII YB Comm. Arb. 752. The court was principally concerned

with whether the Jakarta court was a court of competent authority for the purpose of Art. V(1)(e), but it isimplicit in the reasoning that the Jakarta court’s decision on the jurisdictional issues would have been givenno weight on a challenge under Art. V(1)(a) of the Convention.

214 The court also held that, since the jurisdictional and other objections to the award with which it wasconcerned had been argued unsuccessfully on enforcement proceedings in the USA, the respondent wasprecluded by issue estoppel from raising them again on enforcement proceedings in Hong Kong. But, if so,does this mean that the Hong Kong court would have accepted that the decision of the Jakarta court boundthe parties by issue estoppel if that court had upheld the respondents’ objections to the award in the contextof an application to enforce it in Indonesia, rather than on an application to set it aside? The resolution ofthis conundrum lies outside the scope of this article, as does the debate about whether enforcementproceedings under the New York Convention can give rise to an issue estoppel. See e.g., Karaha Boas Co. v.Perusahaan Pertambangan and others (US Court of Appeals Fifth Circuit, 18 June 2003) XXVIII YB Comm. Arb.908, where it was said that, since the New York Convention envisages forum shopping, enforcementproceedings under its provisions in one jurisdiction do not necessarily have res judicata effect in otherjurisdictions. On the other hand, in Good Challenger Navegante SA v. Metalexportimport SA [2004] 1 Lloyd’s Rep.67 (CA), the English Court of Appeal, although doubting that a foreign judgment concerning theenforcement of an arbitral award could give rise to a cause of action estoppel, accepted that, if the principlesin The Sennar (No. 2) [1985] 1 WLR 490 (HL) were satisfied, such a judgement could give rise to an issueestoppel.

215 Australia, Supreme Court of Melbourne (6 September 2002) XXVIII YB Comm. Arb. 739.


not clear, however, whether, in reaching that conclusion, the court was applyingthe doctrine of issue estoppel.

The second, related,216 principle is that where a remedy for an alleged defectin an arbitral award has been sought from a court at the seat of the arbitration,but refused, leaving the award undisputed, then, as matter of public policy and inthe interests of finality, the enforcing court should not, normally, refuseenforcement on that ground, since it has been conclusively determined by thecourts of the agreed supervisory jurisdiction; with a possible exception where thepowers of the supervisory court are so limited that it cannot intervene wherethere has been an obvious and serious disregard for basic principles of justice bythe arbitral tribunal or where, for unjust reasons, such as corruption, thesupervisory court has declined to intervene.217

Thus, in Newspeed International Ltd v. Citus Trading Pte Ltd,218 which concernedthe enforcement of a Chinese award, the Singapore High Court held that therespondent, having tried and failed to have the award set aside on variousgrounds in the Beijing court, the court at the seat of arbitration, was bound bythe Beijing court’s decision and could not rely on those grounds to resistenforcement.

vi

vi. Enforcing court’s attitude to waivers that bar objections to the tribunal’s jurisdiction at the seat of arbitration

In some jurisdictions, the enforcing court may refuse to admit an objection toenforcement of an award under Article V of the New York Convention that isbarred, for instance by waiver, under the arbitral law of the seat of arbitration.

In Société d’Etudes v. Weyl Beef Products PV,219 enforcement of an English award inthe Netherlands was resisted on the grounds that the arbitration agreement wasinvalid, despite no steps being taken in the courts of England and Wales tochallenge the tribunal’s ruling that it had jurisdiction. The Netherlands Court ofFirst Instance concluded that since, under the curial law, s. 73 of the 1996 Act,the respondent had to exhaust all available remedies to challenge the tribunal’sjurisdiction, and it had not done so, the validity of the arbitration agreement wasfinal under English law and could not be reviewed by the enforcing court.

216 See ABCI v. Banque Franco-Tunisienne [2002] 1 Lloyd’s Rep. 511. In that case, in the context of enforcement ofa French award in England, no weight was given to a decision of a French court that the award was validsince it was not clear that the decision of the French court created an estoppel in French law. This is one ofthe tests for deciding whether the decision of a foreign court gives rise to an issue estoppel. See The Sennar (No.2) [1985] 1 WLR 490 (HL).

217 Minmetals Germany GmbH v. Ferco Steel Ltd [1999] 1 All ER (Comm.) 315 at 331 (Colman J.).218 Singapore, High Court, 4 June 2001, XXVIII YB Comm. Arb. 829. Although, in that case, the objections

concerned want of due process, the reasoning of the court appears to be equally applicable where theobjections concern the tribunal’s jurisdiction.

219 Netherlands, Arrondissementsrechtbank, 19 July 2000, XXVI YB Comm. Arb. 827; see also PetroleumExploration AB v. Lithuania [2005] 1 Lloyd’s Rep. 515. This can be contrasted with the approach of theGerman Court of Appeal in X (UK) v. Y (Germany), Germany, Oberlandesgericht (Court of Appeal),22 November 2001, XXIX YB Comm. Arb. 732, discussed previously.


Certain common law jurisdictions, while not applying the arbitral law of theseat, appear to be developing an analogous principle that, as a matter of publicpolicy, a party cannot ordinarily resist enforcement of an award by complainingof a defect in that award unless it has pursued such remedies as are relevant to thealleged defect under the supervisory jurisdiction of the courts at the seat of thearbitration.220

In Karaha Boas Co. v. Perusahaan Pertambangan and others,221 the Hong Kong HighCourt remarked that if a party failed to challenge a tribunal’s ruling on apreliminary issue, in this case a ruling on a number of jurisdictional and otherquestions, in the supervisory courts at the seat of arbitration, and remained silentuntil enforcement, this might be construed as a waiver.222 A similar point wasmade in Hebei Import & Export Corp. v. Polytek Engineering Co. Ltd,223 by Mason N.P.J.,with whom the majority of the Hong Kong Court of Final Appeal agreed, whenobserving that, other than in the case of an objection to an award on publicpolicy grounds, a party might be precluded from raising a point before the courtof enforcement if it had failed to take that point before the supervisory court atthe seat, its failure to do so amounting to an estoppel or a want of bona fides suchas to justify enforcing the award.

V

V. CONCLUSION: THE APPROPRIATE ROUTE FOR DEALING WITH JURISDICTIONAL ISSUES

Decisions about the appropriate route for dealing with jurisdictional issues underthe 1996 Act involve both a domestic and an international perspective.

a

a. Domestic Perspective

From the domestic perspective, the principal question for a respondent whodisputes the tribunal’s jurisdiction at the outset will be whether to raise thatobjection before the tribunal, once constituted, or to stand back from the arbitralproceedings altogether and seek a determination of that objection in court. If thejurisdictional issue concerns the width of the tribunal’s jurisdiction, rather than itsvery existence, or where the issue can be dealt with on documents only withoutoral evidence, it may be appropriate for the issue to be dealt with, at least initially,by the tribunal either by award on jurisdiction or award, or more usually partial(part) award, on the merits. If either party is dissatisfied with the tribunal’sdecision on its jurisdiction, the objection can then be brought before the court fora rehearing on a s. 67 application, subject to compliance with required time limits

220 Minmetals Germany, supra n. 205.221 Hong Kong: High Court, 27 March 2003, XXVIII YB Comm. Arb. 752, where Coleman J.’s dicta in

Minmetals Germany at 331, about the need, in the first place, to pursue remedies for defects in an arbitralaward through the courts at the seat of the award, was said to be persuasive.

222 But note the contrary view in Paklito Investment Ltd v. Klockner East Asia Ltd (Hong Kong, High Court, 15January 1993) XIX YB Comm. Arb. 664 at 672–673.

223 Hong Kong, Court of Final Appeal, 9 February 1999, XXIVa YB Comm. Arb. 652.


and to the issues raised before the court having been put to the tribunal prior toits ruling.

If the jurisdictional issue concerns the very existence of the tribunal’ssubstantive jurisdiction, or involves disputed facts and, thus, a hearing ofevidence, it may be preferable for the respondent to stand back from thearbitration and bring the matter immediately before the court under s. 72. Theadvantage of doing so is that the risk of duplicated hearings, first before thetribunal and then before the court on a challenge to the tribunal’s ruling on thejurisdictional issue, with the consequent delays and additional costs, is avoided,224

and the risk of recourse to the court being curtailed because the full case was notargued before the tribunal is avoided.

The third possibility, of participating in the arbitral proceedings but seekingrecourse to the court either under its inherent jurisdiction or under s. 32 of the1996 Act, to determine the jurisdictional issue before the tribunal rules on thatissue, will seldom be appropriate. In the case of the court’s inherent jurisdiction,because the ambit of that jurisdiction is unclear and, other than in exceptionalcases, the court will be reluctant to exercise it, even if persuaded that it has sucha jurisdiction. In the case of the court’s jurisdiction under s. 32 of the 1996 Act,because of the restrictions to bringing such an application contained in thatprovision and because of the uncertainty about the status of the court’sdetermination of the issue referred to it.

It will not, ordinarily, be possible for a party participating in the arbitration toreserve a jurisdictional objection for consideration by a court on enforcementproceedings. Once raised before the tribunal, the tribunal will normally deal withthat objection by award. Its determination of the objection will then be final andbinding unless successfully questioned by proceedings under s. 67 of the 1996Act. If the objection is not raised before the tribunal, the right to do so before thecourt will, ordinarily, be lost by operation of s. 73 of the 1996 Act, the statutorywaiver. Neither, in practice, can a non-participant who is alleged to be a party tothe proceedings await enforcement proceedings before raising its jurisdictionalobjection. If it does, it runs the risk that the enforcing court will reject its case onjurisdiction, and enforce an award made in default of its defence on the merits.

b

b. International Perspective

From an international perspective, a principal consideration in deciding, if thereis a choice, whether to bring the jurisdictional objection before the tribunal or thecourt, is whether a decision of the court or of the tribunal is likely to be of moreweight in enforcement proceedings.

If the law of the country of likely enforcement is generous towards thedecisions of foreign courts, either as a matter of general law or as a result ofapplicable treaty obligations between that state and the United Kingdom, oraccepts that such decisions may bind the parties by application of principles of or

224 Azov Shipping Co. v. Baltic Shipping Co. [1999] 1 Lloyd’s Rep. 68.


akin to issue estoppel, it may be preferable to seek an English court’sdetermination of the jurisdictional objection. This will avoid the uncertaintiesover how the enforcing court views the tribunal’s determination of its ownjurisdiction, when considering whether the threshold conditions to enforcementare satisfied and when deciding whether any of the grounds for refusingenforcement are made out. It is, however, important to bear in mind that themanner in which the jurisdiction objection comes before the court may affect theweight given to its decision. So, for example, where the court determines ajurisdictional question on an application under s. 32 of the 1996 Act, theuncertainty over the status of that determination in the law of England and Walesmay mean it is of little weight in enforcement proceedings in another jurisdiction.

In other jurisdictions, it may be that the tribunal’s decision on its ownjurisdiction is of weight under the law of the country of likely enforcement, forinstance, where the law of the enforcing state is prepared to give effect to thestatutory waiver in s. 73 of the 1996 Act as part of the lex arbitri, or where it hasdeveloped the analogous principle that a party cannot resist enforcement of anaward on grounds that could have been, but were not, relied on to challenge thataward under the curial law. In such a case, it may be preferable if thejurisdictional objection is determined, at any rate initially, by the tribunal.

In many jurisdictions, however, at any rate where the jurisdictional objectionconcerns whether an arbitration agreement was concluded at all, the enforcingcourt will regard that objection as concerned with whether the enforcing partyhas satisfied the threshold conditions in article IV of the New York Convention oras raising matters of public policy to be considered under article V(2). If so, it islikely to be irrelevant whether the jurisdictional objection was determined by thetribunal or by a court in England and Wales. The enforcing court will determinethe objection for itself.

jurisdictional disputes under the arbitration act 1996: a ... remedies and may be refused on the...

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